Submission to Select Committee on Certain Aspects of the Queensland Government Administration related to Commonwealth Government Affairs
18 November 2014
Introduction
1. Thank you for the opportunity to make a submission to this Committee. This submission is made by Environmental Justice Australia on behalf of the Conservation Action Trust (“CAT”). Environmental Justice Australia is a public interest legal practice. CAT is non-profit organisation located in Mumbai, India.1 CAT works with communities in the proximity of coal-fired power plants that are currently operational or in development and that are owned by the Adani group of companies (“Adani Group”), including around the Mundra Port and Special Economic Zone.
2. This submission addresses the following Terms of Reference of the inquiry –
(1)(c) approval process for the development of projects for the export of resources or services insofar as they are administered by the Commonwealth or under a bilateral agreement with the Commonwealth; and (1) (e) whether it is appropriate for the Federal Minister for the Environment to delegate his approval powers to the Queensland State Government under the Environment Protection and Biodiversity Conservation Act 1999 by way of approval bilateral agreements or strategic assessments.
3. Our particular focus is the degree to which these processes under Queensland and Commonwealth environmental protection laws are capable of adequately identifying and responding to integrity issues related to the record of environmental compliance of project proponents.
4. CAT is currently a party to litigation in the Land Court of Queensland objecting to the grant of an environmental authority to Adani Mining Pty Ltd for the Carmichael Coal Mine project which includes building Australia’s largest thermal coal mine in the north Galilee Basin approximately 160km north-west of Clermont in Central Queensland (“Carmichael Coal Mine”).
1 See http://www.cat.org.in/.
Environmental PO Box 12123 T (03) 8341 3100 Justice Australia A'Beckett Street PO F (03) 8341 3111 ABN 74052124375 Melbourne VIC 8006 E [email protected] L3, 60 Leicester St, Carlton W www.envirojustice.org.au
5. This submission outlines the reasons for CAT’s concern that the approval process for the development of the Carmichael Coal Mine, administered in part under a bilateral assessment agreement with the Commonwealth, has failed to address important issues about the suitability of the proponent to hold environmental approvals and the poor environmental record of the proponent.
6. We submit that the evidence raises serious questions about whether the proponent of the Carmichael Coal Mine, Adani Mining Pty Ltd (“Adani Mining”), is a suitable entity to develop and operate the mine. In India, the Adani Group has caused serious environmental harm around its port in Mundra and has a very concerning environmental record. Further, there have been worrying reports about involvement by the Adani Group in the illegal export of iron ore, including about bribing government officials.
7. Adani Mining is a wholly owned subsidiary company in the Adani Group and is inextricably linked to the integrated operations of the Adani Group. (This link is described further below at paragraphs 35 to 40.) As a result, the environmental record of the Adani Group should have been considered when assessing Adani Mining’s suitability to hold environmental approvals.
8. As described below, the Commonwealth and Queensland laws have proved inadequate to deal with these issues. This inadequacy of both the Commonwealth and Queensland laws to properly assess the suitability of proponents for major projects with a problematic environmental record will be further exacerbated should the Commonwealth and Queensland governments enter into a bilateral approval agreement which will have the result that these issues will be dealt with solely under Queensland laws and processes.
9. Under current Queensland environmental legislation, the provisions for assessing the environmental record of a proponent are contained in the ‘suitable registered operator’ provisions of the Environment Protection Act 1994 (Qld) (“EP Act”). Registration as a suitable registered operator is a precondition to obtaining an environmental authority. These provisions were introduced with effect from 31 March 2013 by the Environmental Protection (Greentape Reduction) and Other Legislation Amendment Act 2012 (Cth).
10. However we have been informed by the Queensland Department of Environment and Heritage Protection that Adani Mining was not required to submit an application to become a suitable registered operator under section 318F of the EP Act and was instead deemed to be a suitable registered operator under section 705 of the EP Act because it already held an environmental authority for an earlier project. It is unclear whether an adequate assessment of the suitability of Adani Mining to hold an environmental authority was undertaken as part of this earlier approval process. We are unaware whether Adani Mining declared its full environmental record when it applied for the environmental authorities that have been granted to it, and we have seen no record of Adani Mining declaring to the Queensland and Commonwealth governments the adverse findings against Adani Mining’s parent company that have been made by the Indian Ministry of Environment and Forests, described in paragraphs 17 to 28 below.
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11. It is also not clear that the environmental history of the Adani Group has been adequately considered under Commonwealth environmental legislation, although this is a matter clearly relevant to the grant of approval under that legislation. Under section 136(4) of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (“EPBC Act”) provides that the Federal Minister for the Environment, when considering whether to grant an approval under that Act, may consider whether the person is suitable person to be granted an approval, having regard to:
“(a) the person’s history in relation to environmental matters; and (b) if the person is a body corporate—the history of its executive officers in relation to environmental matters; and (c) if the person is a body corporate that is a subsidiary of another body or company (the parent body)—the history in relation to environmental matters of the parent body and its executive officers.”2
12. The Federal Department of the Environment the Commonwealth has also issued a policy statement addressing the consideration of a person’s environmental history.3 This policy statement indicates that matters relevant to a proponent’s environmental history should be interpreted broadly and will include non- compliance even where no proceedings are initiated in relation to that non-compliance, and non-compliance identified through monitoring and audit activities.
13. Adani Mining has made two referrals under the EPBC Act: for the North Galilee Basin Rail project and for the Carmichael Coal Mine.4 It is not clear that Adani Mining has provided any information about the environmental history of the Adani Group to the Federal Department of the Environment beyond that included in the referrals, or that the Federal Department of the Environment has given consideration to any information beyond that provided by Adani Mining in its referrals. In its referral documentation for the Carmichael Coal Mine dated 2010, in response to the question “Does the party taking the action have a satisfactory record of responsible environmental management?”, Adani Mining stated “The Carmichael Coal Mine and Rail Project is the Adani Group’s first operation within Australia. The Adani Group has a history of responsible environmental and community management applied to similar projects in other countries.”5 In response to the same question in relation to the North Galilee Rail project, in its referral documentation in
2 Environment Protection and Biodiversity Conservation Act 1999 (Cth), s 136(4). 3 Australian Government Department of the Environment, EPBC Act Policy Statement – Consideration of a person’s environmental history when making decisions under the EPBC Act, available at download at http://www.environment.gov.au/resource/epbc-act-policy-statement-consideration-persons-environmental-history- when-making-decisions (accessed November 17, 2014). 4 Australian Government Department of the Environment, Referrals list page (search for “Adani Mining”), available at http://www.environment.gov.au/cgi- bin/epbc/epbc_ap.pl?name=current_referrals&limit=999999&text_search=adani+mining (accessed November 17, 2014). 5 See “Invitation for Public Comment on Referral,” available to download at Australian Government Department of the Environment, Referral Detail – Adani Mining Pty Ltd/Mining/Moray Downs Cattle Station 160km North West of Clermont/QLD/Carmichael Coal Mine and Rail Project (2010/5736), page 27, available at http://www.environment.gov.au/cgi-bin/epbc/epbc_ap.pl?name=current_referral_detail&proposal_id=5736 (accessed November 17, 2014).
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2013, Adani Mining excluded any reference to the operations of the Adani Group outside Australia and stated “Adani has not been subject to any proceedings under a Commonwealth, State or Territory law for the protection of the environment or the conservation and sustainable use of natural resources. Since establishing in Australia, Adani has sought to deliver community benefit from its business involvement.”6
14. Notably, in relation to the North Galilee Rail project, which was assessed via environmental impact statement under the EPBC Act, the Federal Department of the Environment’s guidelines for the EIS, issued in August 2013, required information about the environmental record of the proponent7.
15. However, the Carmichael Coal Mine was assessed under the bilateral assessment agreement with the Queensland Government. Accordingly, the environmental history of the proponent was left to be addressed under the bilateral agreement and, as a result, it is unclear whether or how the environmental history of Adani Mining was considered in the assessment process for the Carmichael Coal Mine.
16. A proper assessment of the Adani Group’s environmental history is extremely important. As noted above, the Carmichael Coal Mine will be Australia’s largest thermal coal mine. It will have significant environmental impacts, including on environmentally sensitive areas. An environmental authority for this project should not be granted without proper consideration of the environmental record of the proponent, including the environmental history of wider corporate group to which its operations are inextricably linked.
The Adani Group’s record of environmental harm and breach of environmental regulations at its port and special economic zone in Mundra, India
17. At Mundra, in the coastal state of Gujarat, the Adani Group operates the “[l]argest single location private coal based power plant in the world” with a capacity of 4,620MW.8 It also operates a port and special economic zone at Mundra (the “Mundra Port and SEZ”) – the largest port in India, and Asia’s largest coal import terminal.9
18. There is evidence of serious environmental harm around the Mundra Port and SEZ. For example, in December 2010, the Indian Ministry of Environment and Forests (“MoEF”) conducted a site visit to the
6 See “Invitation for Public Comment on Referral,” available to download at Australian Government Department of the Environment, Referral Detail – Adani Mining Pty Ltd/Transport - land/Carmichael Mine & Rail Project's rail to Port of Abbot Point/QLD/North Galilee Basin Rail Project (2013/6885), page 29, available at http://www.environment.gov.au/cgi-bin/epbc/epbc_ap.pl?name=current_referral_detail&proposal_id=6885 (accessed November 17, 2014). 7 Australian Government Department of the Environment, Final guidelines for an environmental impact statement for the North Galilee Basin Rail Project (August 1, 2013), page 20, available at http://www.environment.gov.au/epbc/notices/assessments/2013/6885/2013-6885-final-eis-guidelines.pdf (accessed November 17, 2014). 8 Adani, Power generation – thermal, available at http://adanipower.com/power-thermal (accessed November 14, 2014). 9 Adani, Adani Ports, available at http://www.adaniports.com/ (accessed November 14, 2014).
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Mundra Port and SEZ, and filed a report on that visit (“2010 Report”).10 A copy of that report is Attachment 1 to this submission. The 2010 Report noted that the relevant environmental permits for the Mundra Port and SEZ stated that:
a. “[n]o existing mangroves shall be destroyed;” b. “[t]here shall be no filling up of the creek and reclamation of the creeks;” and c. “[c]onstruction of the proposed structures, if any in the Coastal Regulation Zone area shall be undertaken meticulously conforming to … rules and regulations … . All the construction designs/drawings relating to the proposed construction activities must have approvals of the concerned State Government Departments/Agencies.”11
19. The 2010 Report found:
a. large scale reclamation using dredged material was being carried out on the mangrove area behind the West port and North port site;12 b. a dredging disposal pipeline had been laid in the inter-tidal area carrying dredged material to the landward side of the port to reclaim the land area on the west and north port side. The pipeline had been “obstructing the tidal flow due to which the mangroves stretch on the western and northern port side have been affected and at several places they have dried up;”13 c. “[a]t several places there has been large scale destruction of mangrove area specially at the northern port side abutting the dredging pipeline;14 d. “[t]he creeks systems and the natural flow of seawater is being obstructed by reclamation along the creeks. At some stretches destruction of mangroves has been observed;”15 e. an airport and hospital had been developed apparently without obtaining the proper environmental permits;16 and f. a township had been developed by reclaiming coastal regulation zone area without obtaining proper environmental permits.17
20. On 15 December 2010, the MoEF issued a “show cause” notice to the company in the Adani Group that operates the Mundra Port and SEZ.18 A copy of this notice is Attachment 2 to this submission. The notice stated that, based on the 2010 Report, MoEF is of the opinion that the Adani Group company had “violated
10 Site visit to M/s Mundra Port & SEZ Ltd Port site at Mundra and M/s OPG Power Gujarat Private Limited on 6th – 7th December 2010, available at http://www.moef.nic.in/downloads/public-information/site-visit-Mundra-OPG.pdf (accessed November 17, 2014). 11 Id., page 2. 12 Id. 13 Id., page 3. 14 Id. 15 Id. 16 Id., page 4. 17 Id. 18 MoEF, Show Cause Notice under Section 5 of Environment (Protection) Act, 1986 for violation of the provisions of the Coastal Regulation Zone Notification 1991 by M/s Mundra Port & SEZ Ltd (15 December 2010).
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the Coastal Regulation Zone Notification, 1991, approved Coastal Zone Management Plan of Gujarat dated 27th September, 1996 and have not complied with the conditions listed in the environmental clearance letter issued by the [MoEF]… .”19 The notice required the company in the Adani Group to show cause, within 15 days, why
a. environmental clearances for the West port, North port, and township project should not be cancelled; b. the pipeline carrying dredged material for reclamation should not be dismantled and removed and the channels opened up for the in-flow of tidal water; c. all reclamations that had been carried out in the mangrove area should not be dismantled and removed; d. all channel/creek systems which had been reclaimed should not be opened up in order to provide for the natural flow of seawater; and e. a mangrove afforestation of an additional 1000 hectares should not be undertaken with funding from the Adani Group.20
21. On 14 September 2012, following complaints about the environmental harm at Mundra Port and SEZ, the MoEF constituted an independent Committee for Inspection (“Committee”) into the Mundra Port and SEZ.21
22. In April 2013, the Committee issued its report (“2013 Report”).22 A copy of that report is Attachment 3 to this submission.
23. The 2013 Report summarised the allegations against the Adani Group as follows:
“a. There has been widespread destruction of mangroves, which was strictly prohibited in the clearances granted; b. The creeks and inter-tidal system has been adversely affected, particularly, the Kotdi creek, which has been blocked; c. There has been mismanagement of fly ash from the thermal power plant, which has resulted in fugitive emissions during disposal and pollution of groundwater; d. The large volume of seawater stored in the unlined pond and conveyed through the intake and outfall channel has increased salinity and contaminated water sources; e. The original [high tide line/low tide line] has been distorted because of human made bunds and blocking of creeks;
19 Id., paragraph 19, and paragraphs 1-18. 20 Id., paragraph 20. 21 Office Memorandum, MoEF, Constitution of Committee for inspection of M/s Adani Port and SEZ Ltd, Mundra, Gujarat (14 September 2012), available at http://www.moef.nic.in/sites/default/files/01_order_AdaniPort14092012.pdf (accessed November 5, 2014). 22 Report of the Committee for Inspection of M/s Adani Port & SEZ Ltd, Mundra, Gujarat (April 2013), available at http://www.moef.nic.in/sites/default/files/adani-report-290413.pdf (accessed November 17, 2014).
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f. The company is non-compliant with conditions imposed at the time of environmental clearance.”23
24. The 2013 Report found “incontrovertible evidence of violation of conditions [of environmental clearances] and non-compliance.”24 A summary of the Committee’s findings are as follows:
a. Procedural lapses: i. There have been attempts to bypass statutory procedures by using different agencies for obtaining environmental clearances for the same project.25 ii. The public hearing procedure has been bypassed on a number of pretexts.26 iii. An airstrip/aerodrome which is part of the special economic zone (“SEZ”) was constructed without the SEZ having an environmental clearance.27 iv. The requirement that all projects within the SEZ have environmental clearance has not been complied with.28 b. Blocking of creeks: i. The environmental clearances do not allow any changes to creeks or creek mouths.29 However, there has been a distinct change where Baradi Mata creek meets the sea, because of construction for the Adani Group’s Water Front Development Project.30 ii. The creek branches in the proposed North port site have completely disappeared over the years.31 c. Destruction of mangroves: i. In violation of environmental conditions for protecting mangroves, the mangrove patch along the west of Navinal creek has vanished.32 ii. Proper precautions to safeguard the Bocha Island conservation area were not taken and, as a result, around 75 hectares of mangroves in that area have been lost.33 iii. The mangroves at the proposed North port site have vanished and the creek has disappeared due to reclamation work.34 iv. In violation of its environmental clearances, the Adani Group failed to ensure protection of mangroves around Baradi Mata mouth (around the mangrove conservation area near the lighthouse at the South port).35
23 Id., page 76. 24 Id., page 81. 25 Id., pages 76-77. 26 Id., page 77. 27 Id. 28 Id. 29 Id., page 78. 30 Id. 31 Id. 32 Id. 33 Id., page 79. 34 Id. 35 Id.
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d. Flyash utilization and disposal: i. The fly ash inventory does not satisfactorily demonstrate proper utilization and disposal of fly ash. This suggests the “possibility of dumping of ash, which would lead to air pollution and land degradation and would be termed as non-compliance” with the environmental clearances.36 ii. There was a failure to conduct regular monitoring in and around the ash pond area, in violation of the conditions of the environmental clearance.37 e. Increase of salinity in groundwater i. In violation of environmental conditions, there was a failure to use lining to protect against salinity intrusion into groundwater.38 ii. There was a failure to monitor groundwater for salinity and pollution as required by the environmental clearance.39 f. Noncompliance with monitoring and reporting conditions i. The Adani Group company has been “less than serious” about reporting on compliance with environmental conditions, and the reports it has produced are “at best perfunctory and non-committal.” For example, it appears not to have monitored and reported on effluent discharge temperature as required by the environmental clearance.40
25. The 2013 report also recommended the establishment of an Environment Restoration Fund, comprised of 1% of the project cost or Rs. 200 crore (whichever is higher).41 The money would be used to protect marine ecology, develop new mangrove conservation areas, restore and conserve creeks, conduct independent studies and monitoring, and for social infrastructure and livelihood support for fishing communities.42
26. The 2013 Report also made many other recommendations, including cancelling the environmental clearance for the North port, restoring all creeks around the North port area to pre-2005 status and declaring the area as a conservation zone, protecting and regenerating mangrove areas, requiring an action plan for mangrove conservation, and requiring the proper lining of the intake/outfall channel and storage ponds to prevent salinity intrusion.43
36 Id. 37 Id. 38 Id., page 80. 39 Id. 40 Id., pages 80-81. 41 Id., pages 81-82. A crore is 10 million. 200 crore rupees is around AUD$37 million. See http://www.xe.com/currencyconverter/convert/?Amount=2000000000&From=INR&To=AUD (accessed November 17, 2014). 42 Id. 43 Id., pages 82-85.
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27. On 30 September 2013, the MoEF issued a “show cause” notice “Show Cause Notice” to the relevant Adani Group company.44 A copy of this notice is Attachment 4 to this submission. The notice requests the Adani Group company to show cause why the environmental clearance for the North port should not be cancelled, and states that that clearance will be kept in “abeyance” pending decision on the notice.45 The notice also:
a. requires the establishment of an Environment Restoration Fund of Rs. 200 crores or 1% of the project cost, whichever is higher, to be used for remediation of environmental damage in Mundra;46 b. states that “North Port area and Bochha Island should be declared as [a] conservation zone and the area should be protected. All the creeks, water bodies and reclaimed land in these areas should be restored and brought back to pre-2005 status within six months;”47 c. requires the Adani Group company to submit certain responses and actions plans, including a plan to protect the livelihood of fishermen whose catch and access to the sea have been seriously affected by violations committed by the company;48 d. directs the Adani Group company to ensure all projects within the SEZ possess an environmental clearance;49 and e. requests the Adani Group company to consider the voluntary return of village common land and to invest in improving productivity of this land with villagers.50
28. We understand that the Adani Group is disputing this “show cause” notice.
The Adani Group’s involvement in illegal iron ore dealings in India
29. In July 2011, the Lokayukta (ombudsman) of the Indian state of Karnataka released a report on the illegal mining and export of iron ore between 2000 and 2010.51 A copy of this report is Attachment 5 to this submission.
30. The report stated that “Adani Enterprises Limited … [has] been found to be actively involved in large scale illegal exports of the iron ore causing huge loss to the Government.”52 Adani Enterprises Ltd are the ultimate holding company of Adani Mining.53
44 MoEF, Issue of Show Cause Notice for alleged violations (September 30, 2013), available at http://www.moef.nic.in/sites/default/files/Adani%20SCN.pdf (accessed November 17, 2014). 45 Id., page 3. 46 Id., page 2. 47 Id. 48 Id., pages 2-3. 49 Id., page 2. 50 Id. 51 Karnataka Lokayukta, Report on the Reference made by the Government of Karnataka under section 7(2-A) of the Karnataka Lokayukta Act, 1984 (Part – II) (July 27, 2011), available at http://www.thehindu.com/multimedia/archive/00736/Report_on_the_refer_736286a.pdf (accessed November 14, 2014). 52 Id., page 55. 53 ASIC Current and Historical Company Extract as at 13 November 2014 for Adani Mining Pty Ltd CAN: 145 455 205
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31. Adani Enterprises Limited was one of four port service providers at the Port of Belekeri (“Port”) in Karnataka.54 Iron ore was transported from mines to the Port where it was loaded onto ships for export. Port service providers provided infrastructural facilities and were required to, among other things, maintain records of the quantity of iron ore received by truck at the Port, the quantity of iron ore loaded onto ships for export, and associated payments.55
32. The Lokayukta’s report found that:
a. Adani Enterprises Limited paid bribes to officials at the Port department, customs, police, the State Pollution Control Board, local politicians and others to receive “undue favour for illegal exports.”56 b. Adani Enterprises Limited routinely received trucks that were loaded with iron ore above the permitted amount.57 For example, the average truckload of iron ore received at Adani Enterprises Limited’s plots was 20.26MT, but the permitted load was only 16 MT.58 Indeed, “over loading of trucks carrying iron ore is a routine practice leading to substantial iron ore theft.”59 c. Adani Enterprises Limited also received iron ore from suppliers without permits to supply that ore.60 d. In February 2010, police raided the Port and seized documents from Adani Enterprises Limited’s offices, including forged permits.61
33. The Lokayukta’s report concluded that the other three service providers at the Port were also involved in the illegal export62 and that, between 2006 and 2010 around 7.7 million tonnes of iron ore was illegally exported from Port.63
34. The Lokayukta’s recommended that Adani Enterprises Limited be stripped of its right to operate at the Port and “be black-listed and barred from participating in any future contract, grant or lease, etc by the Government.”64 It also recommended that “criminal cases under the Prevention of Corruption Act should be filed against those who figured in the seized record of Adani Enterprises.”65
54 Id., page 32. 55 Id. 56 Id., pages 54-55. 57 Id., pages 23 and 34 58 Id. 59 Id., page 34. 60 Id., pages 46-49. 61 Id., page 34. 62 Id., page 55. 63 Id., pages 20 and 34. 64 Id., page 55. 65 Id., page 54.
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The operations and actions of the Adani Group are inextricably linked with Adani Mining
35. Adani Mining is part of the larger Adani Group, which comprises the holding company, Adani Enterprises Limited, and 80 subsidiaries (as at March 31, 2014).66 Adani Mining is a wholly-owned step-down subsidiary of Adani Enterprises Limited.67
36. Adani Mining is inextricably linked to the wider Adani Group. The Adani Group presents itself as a unified entity with an integrated business – “Adani is a globally integrated infrastructure player”68 – and does not distinguish between the operations of the different Adani Group companies.69 Indeed, Adani Mining does not have a separate website; rather information about Adani Mining is presented as a component of the mining activities of the Adani Group.70
37. There are many other statements from the Adani Group demonstrating that its companies are interconnected and that it treats the operations of its companies as part of a whole:
a. “…Adani has expanded its operations to Indonesia and Australia by acquiring coal mines and ports. Two significantly large acquisitions in Australia are the Galilee Basin coal mine [i.e., the Carmichael Mine], with reserves of 11.04 billion metric tonnes…, and Abbot Point port, with a capacity of 50 million metric tonnes… .”71 b. “We are developing and operating mines in India, Indonesia and Australia… .”72 c. “The Adani Group’s venture into Australia commenced in 2010 with the purchase of coal tenements for the proposed Carmichael Mine in the Galilee Basin, Central Queensland, and a 99 year lease of the coal terminal at the Port of Abbot Point near Bowen in North Queensland. Our vision is to execute a vertically integrated ‘pit to plug’ business with the coal from the proposed Carmichael Mine being transported by rail to the Port of Abbot Point for export to meet consumers’ demands in offshore markets.”73 d. “Our wholly owned step down subsidiaries in Australia have 100% interest in the Carmichael Coal Mine… . During the year under review, the Company [Adani Enterprises Limited] has undertaken
66 Adani Enterprises Limited, 22nd Annual Report 2013-2014 (“Adani Annual Report”), pages 28 and 65, available at http://www.adani.com/Common/Uploads/FinanceTemplate/1_FFReport_AEL%20AR%202014-15.pdf (accessed November 14, 2014). 67 ASIC Current and Historical Company Extract as at 13 November 2014 for Adani Mining Pty Ltd CAN: 145 455 205; and Id., pages 131 and 133, which indicates that, as at March 31, 2014, Adani Mining was 100% owned by Adani Global Pte Ltd (incorporated in Singapore), which was 100% owned by Adani Global Ltd (incorporated in Mauritius), which was 100% owned by Adani Enterprises Limited. 68 Adani, Corporate Brochure, page 1, available at http://www.adani.com/Common/Uploads/HomePageTemplate/2_File_Adani%20Corporate%20brochure%20.pdf (accessed November 14, 2014). 69 See, for example, Id., pages 8-9. 70 See generally, http://www.adanimining.com/ (accessed November 14, 2014). 71 Adani, Corporate Brochure, page 4, above n 68. 72 Id., page 12. 73 Adani, Chairman’s message: A growth story, available at http://www.adanimining.com/chairmans-message (accessed November 14, 2014). See also, Adani, About Adani Mining Australia, available at http://www.adanimining.com/businesses (accessed November 14, 2014).
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various mine optimisation studies and is currently undertaking bankable feasibility studies for the project.” 74
38. The Queensland Coordinator-General’s report on the environmental impact statement for the Carmichael Mine refers to Adani Mining as part of the larger Adani Group:
“Adani Mining … [is] an Australian subsidiary of Adani Enterprises Limited based in Ahmedabad, India. Adani Enterprises has interests in global trading, development and operation of ports, inland container terminals, establishment of special economic zones, oil refining, logistics, gas distribution and power generation, transmission and trading.
Adani [Mining] was established in Australia in mid-2010 with the intent of exploring for, mining, and exporting coal resources. Adani Abbot Point Terminal Pty Ltd (Adani APT) has also been established in Australia by Adani Enterprises Limited to develop the Abbot Point coal terminals as part of its overall program for coal export.”75
39. Because companies within the Adani Group, including Adani Mining, are so inextricably linked, any environmental record of the Adani Group should be considered when assessing whether a wholly owned subsidiary of the Adani Group is a suitable entity to be holding an environmental approval and operating in environmentally sensitive areas.
40. It is clear that the environmental approvals process under Queensland and Commonwealth laws has failed to adequately assess Adani Mining’s suitability to undertake the Carmichael Coal Mine project, and associated projects.
Concluding remarks
41. We submit that the matters outlined above demonstrate that processes under Queensland and Commonwealth environmental protection laws for identifying issues related to non-compliance with environmental laws are inadequate. This submission has focused on issues related to approval processes for the Adani Group's Carmichael Coal Mine; however there is no reason to think that these issues would not be similar across other major projects.
42. In this case the weak provisions of both the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) and Queensland environmental protection laws have proved insufficient to identify significant
74 Adani Annual Report, page 36, above n 66. 75 Queensland Government, Department of State Development, Infrastructure and Planning, Carmichael Coal Mine and Rail project: Coordinator-General’s evaluation report on the environmental impact statement (May 2014), page 2, available at http://www.dsdip.qld.gov.au/resources/project/carmichael/carmichael-coal-mine-and-rail-cg-report- may2014.pdf (accessed November 14, 2014).
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issues relating to the proponent’s history of environmental compliance. Identification of issues seems to be largely reliant on information volunteered by project proponents at an early stage of the approvals process with little or no consideration of the issue through the environmental impact assessment and final decision- making.
43. Reforms to the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) to address these issues might include making the proponents environmental history under section 136 a mandatory consideration, greater clarity around the matters that will be relevant to this consideration and, if necessary, removal of any limitation that section 5 of the Act presents to the consideration of conduct occurring outside of Australia.
44. Recent developments increase concerns about whether it is appropriate for the Queensland government to manage compliance risks associated with the Adani Group’s mine and rail project. The refusal of Banks in Europe and the USA to finance this project (a reflection of concerns about environmental impacts and financial viability) has now lead the Queensland government to committing to take a stake in the rail link that will be required to transport coal from the Carmichael Mine to Abbot Point. This heightens concerns that the issues identified in this submission with respect to inadequate scrutiny of the proponent’s record of compliance will be further exacerbated by a weak approach to environmental monitoring and compliance by a conflicted Queensland government. Recent statements by the Indian Minister for Power and Mining that India will stop importing coal by 2017 will only increase the level of this conflict as the Queensland government comes under increasing pressure to realize a return on a poor investment.
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REPORT OF THE COMMITTEE FOR INSPECTION OF M/sA DANI PORT & SEZ LTD. MUNDRA, GUJARAT
APRIL 2013
MINISTRY OF ENVIRONMENT AND FORESTS, NEW DELHI II April 18, 2013 Ms Jayanthi Natarajan Minister of State Ministry of Environment and Forests Paryavaran Bhawan, CGO Complex New Delhi
Dear Ms Natarajan,
We would like to thank you for the opportunity to be part of the Committee to inspect M/s Adani Port and SEZ Ltd., Mundra, Gujarat. We are aware that the issues before us are important in terms of safeguarding coastal ecology as well as livelihoods of people. We are also aware that our Committee is not the first to examine allegations of non-compliance with environmental conditions of this company. But we hope, that this report will help to settle the controversy and conflict to a large extent, by presenting factual information and analysis on what has gone wrong, as well as detailed recommendations on the future plan for remedial action.
Our objective has been to base our conclusions on evidence and thorough assessment of adverse impacts. This, we believe, is necessary for the report to be credible and independent.
Our overall assessment is that there are instances of violations and non-compliance with environmental conditions, which need to be addressed. We need effective deterrents for the future. But it is equally important that urgent steps are taken to repair damage and to mitigate future harm. We have in our recommendations set out the agenda for action in this case.
But this is just one part of the action plan we have recommended. It is equally necessary for us to reform and strengthen the policy and regulatory system of coastal zone management and environmental clearances. We believe that the need for this Committee and many others could have been obviated if there is a robust monitoring system, in the public domain. We hope that you will direct action on this matter, with the urgency that is required.
We hope that our report will provide the analysis for future directions on this specific case and many other related issues.
With warm regards,
Sunita Narain (Chairperson) Director General, CSE
R Ramesh A Mehrotra (Member) (Member) Director, NCSCM Director, MoEF-Bhopal
Lalit Kapur Antony Gnanamuthu (Member) (Member) Director, MoEF Member, EAC-II (Industry) C o n t e n t s
1. Constitution of Inspection Committee and ToR 3
2. Background of Clearances Granted 4 2.1 Mundra Port Area (Mundra Port and SEZ Limited) 4 2.2 Power Project (Adani Power Limited) 6 2.3 Mundra SEZ, Forest and Airport Clearances 8
3. Examination of Issues: Specific Environmental Impacts 12 3.1 Diversion, Blocking of Creeks and Reclamation to Distort HTL 12 3.2 Destruction of Mangroves and Leveling of Sand Dunes 17 3.3 Handling of Fly Ash 27 3.4 Earthquake/Tsunami and Project Clearance 34 3.5 Salinity Ingress and impact on agriculture 37
4. Compliance with Environment and Forest Conditions 48 4.1 Development and Compliance for Port, Roads (Waterfront Development) 48 4.2 Development and Compliance for Thermal Power Plant 49
5. HTL Line Demarcation 53 5.1 Possible HTL Violations in Construction of Samundra Township 53 and Sterling Hospital 5.2 Possible HTL/LTL Violation in Project Area 60
6. Critical Issues not in ToR 67 6.1 Fishermen Livelihood and Access to Fishing Grounds 67 6.2 Village Common Land (Gauchar) 70 6.3 Cumulative Impacts of Power Plants and Port Projects 73
7. Summary of Observations and Recommendations 76 7.1 Overall Observations and Assessment 76 7.2 Recommendations for effective deterrence for non-compliance and remedial measures 81 7.3 Specific recommendations on reform of CRZ regulations 85 7.4 Specific recommendations on project clearance conditions and 86 post clearance monitoring
References 87
2 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
1. Constitution of Inspection Committee and ToR
n September 14, 2012, the Ministry of Environment and Forests (MoEF) constituted a Committee for inspection of M/s Adani Port and SEZ Ltd., Mundra, Gujarat. The OCommittee was set up based on complaints received from Kheti Vikas Sewa Trust and Machimar Adhikar Sangharsh Sangathan (MASS) regarding severe impact upon environment safety and integrity in the Mundra Port and SEZ Limited area committed by M/s Adani Port and SEZ Limited (Annexure 1).
The broad terms of reference (ToR) of the Committee are as follows:
● The allegations regarding bunding/diversion/blocking of creeks and reclamation etc., and thereby distortion of original High Tide Line (HTL).
● The HTL submitted by the proponent and HTL of the approved Coastal Zone Management Plan (CZMP).
● Whether construction of Mundra port, roads, railway was taken up prior to grant of Forest/ Environmental Clearances.
● The development of port with respect to the approved components.
● Compliance to the conditions of the Environmental Clearance (EC) and Coastal Regulation Zone (CRZ) Clearance granted for the port development.
● The destruction of mangroves and leveling of sand dunes.
● The development of power plant with respect to the approved components.
● Compliance to the conditions of the EC granted for the power plant.
● The likely impacts on agriculture due to ingress of salinity resulting from creation of huge water body of sea water for Adani Power Plant at Mundra Taluka.
● The issues related to handling of fly ash by Adani Power Limited and particularly with reference to the Notification on utilization of fly ash.
● The issues related to earthquake/tsunami/other natural calamities and soil liquefaction which may be impacted adversely by the project.
3 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
2. Background of Clearances Granted
here are three distinct components of the project area, which need to be understood in terms of activities and clearances to make an assessment of environmental impact and Tnon-adherence to conditions stipulated at the time of clearance. These are: ● Mundra Port area later called Waterfront Development
● Thermal Power Plant
● Special Economic Zone (SEZ)
These activities are located in a contiguous region and therefore, environmental and social impacts are also inter-related, and often cumulative. The project has also sought and got approvals in different phases.
2.1: Mundra Port Area (Mundra Port and SEZ Limited)
August 25, 1995, the first clearance was granted to M/s Adani Port Limited for the handling facility of general cargo, LPG and chemical storage terminal.
September 20, 2000, clearance was granted to port expansion project, including bulk cargo container, railway link and related ancillary and back up facilities to M/s Gujarat Adani Port Limited (GAPL).
July 21, 2004, clearance was granted for single point mooring; crude oil terminal etc., to GAPL.
February 5, 2007, clearance was granted for multipurpose berth (Terminal 2) at the Mundra Port to GAPL.
September 28-29, 2007, CRZ, infrastructure and miscellaneous projects Expert Appraisal Committee (EAC) meeting (57th) discussed EC for Multi Product SEZ (Phase 1B and Social Infrastructure) in Mundra, by Mundra Port and SEZ Limited (MPSEZL). This meeting considered the entire project, including waterfront development, to be in the SEZ. The EAC was of the view that the project proponent should get CRZ mapped by Space Application Centre (SAC) and National Institute of Oceanography (NIO).
April 23, 2008, CRZ, infrastructure and miscellaneous projects EAC meeting (64th) discussed EC for waterfront development of MPSEZL. The project proponent informed the EAC that the West port ToR was given on August 1, 2007; South port ToR on October 9, 2007. Now the project proponent sought clearance for all components of the project, which also included additional ports namely, North port, East port and a shipyard. The EAC noted that the project had been considered in the September meeting where the CRZ map for SEZ had been sought and accordingly MoEF had informed the project proponent through its letter dated October 9, 2007. This letter laid down ToRs for preparing the Environment Impact Assessment (EIA) report for South Port (South Basin, bulk terminal, LNG, chemical terminal etc.). EAC noted, “As on today, no information has been received from the project proponent with regard to the SEZ project. Now M/s Adani proposes to develop the foreshore facilities for the project in Phase 1, while the Phase 2 of the project which involves development of project on the onshore area will be taken up later.”
4 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
October 12, 2008, public hearing held for the proposed waterfront development plan where issues of livelihood were raised strongly (fishermen and gauchar land).
November 26-28, 2008, CRZ, infrastructure and miscellaneous projects EAC meeting (71st) said that the project proponent now proposed only to carry out waterfront activities relating to the SEZ project. It noted that about 63 hectare (ha) of mangroves would be destroyed, but as per CRZ regulation 1991 the destruction for such activities is not permissible.
December 19-20, 2008, during the CRZ, infrastructure and miscellaneous projects EAC meeting (72nd), the project proponent informed that no destruction of mangroves would take place in the North Port. The EAC also noted that only waterfront activities will be taken up; the SEZ project will be taken up separately. EAC recommended clearance for the project.
January 12, 2009, the waterfront development project – which includes the North, South, West and East ports – was granted clearance to M/s Mundra Port and SEZ Limited.
January 19, 2009, additional clearance letter giving description of the South and West ports was issued. The EC also included the provision for laying down intake and outfall system for the Adani thermal power plant.
January 30-31, 2009, CRZ, infrastructure and miscellaneous projects EAC meeting (73rd) finalized ToRs for the LNG terminal at Mundra Port by M/s Gujarat State Petroleum Corporation (GSPC) LNG Limited. The application for transfer of EC from M/s MPSEZL to M/s GSPC LNG Limited was made, and the EAC said that public hearing has to be conducted for the project as per EIA notification 2006. It was informed that M/s GSPC will have 50 per cent equity, M/s Adani Infrastructure will have 25 per cent equity and balance 25 per cent will be of financial institutions. It was also informed that this project was part of the waterfront development project that received clearance in January 2009.
August 27-28, 2009, CRZ, infrastructure and miscellaneous projects EAC meeting (79th) exempted the GSPC LNG project from public hearing after the proponent informed that this project is part of the waterfront development project that received clearance in January 2009 and public hearing was already conducted for the waterfront development project.
February 25-26, 2010, CRZ, infrastructure and miscellaneous projects EAC meeting (85th) recommended the LNG terminal EC transfer subject to conditions like fishing activities in the area should not be hindered, Environmental Management Plan (EMP) should be complied with, etc.
November 30, 2010, CRZ, infrastructure and miscellaneous projects EAC meeting (94th) received a complaint against the LNG terminal. The EAC suggested to obtain comments from the state government and deferred the decision on the project.
September 19, 2012, CRZ, infrastructure and miscellaneous projects EAC meeting (116th) considered the proposal of M/s Adani Port and SEZ Limited (APSEZL) for a crane roll jetty at West Port. It was informed that this project is within the approved waterfront development. The EAC recommended the project for environmental and CRZ clearance.
5 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
2.2: Power Project (Adani Power Limited)
The project has expanded primarily in three phases over a period of five years, between 2007 and 2011. Over this period, ECs and Consents to Establish (CTEs) or No Objection Certificates (NOCs) have been assessed and granted for the following activities:
October 13, 2006, Public hearing for Phase I of the thermal power plant (TPP) of 660 megawatt (MW) capacity was held.
January 29, 2007, Gujarat Pollution Control Board (GPCB) gave CTE for Phase I of TPP (660 MW capacity).
February 27, 2007, GPCB issued a revised NOC for Phase I with respect to using coal as fuel. The previous consent was given for lignite based TPP.
March 12-14, 2007, TPP and coal mine EAC meeting (42nd) discussed the proposal of M/s Adani Power Private Limited for setting up a 660 MW imported coal based TPP. EAC asked for information before considering the project further – marine EIA, impact of withdrawal of water from Kotdi creek on mangroves, details of intake and discharge points, details of dredging and widening of creek, etc.
May 10, 2007, Ministry of Commerce and Industry notified power SEZ under Adani Power Private Limited of 293.881 ha in Tunda and Siracha villages.
July 9-10, 2007, reconstituted TPP and coal mine EAC meeting (2nd) recommended clearance for Phase I of TPP. The EAC took the view that even though the map of HTL provided was not clear, it would depend on the letter from Gujarat government. This letter said that the power plant location as demarcated on the HTL map, prepared by SAC, is outside CRZ area.
August 13, 2007, MoEF gave EC for Phase I of TPP.
November 29-30, 2007, CRZ, infrastructure and miscellaneous projects EAC meeting (59th) considered the proposal for CRZ clearance for intake and disposal facility of Phase I of TPP. It was informed that the length of the intake channel is 1.8 km and an effluent discharge pipeline of 3.5 km into Kotdi creek for dilution is to be set up. The discharge pipeline is with a diffuser and the discharge point is as per NIO recommendation. The temperature difference of effluent from receiving body was estimated to be 7oC. The EAC recommended the project for clearance subject to some conditions.
February 11-13, 2008, reconstituted TPP and coal mine EAC meeting (16th) considered the proposal from M/s Adani Power Limited (APL) for Phase II (1980 MW) of TPP. The EAC exempted the project from public hearing as it was in a notified power SEZ. It was discussed that the thermal discharge from Phase II is going to be much higher than Phase I and the need for a marine EIA was felt. The EAC thus deferred its decision on the project and asked for information like fly ash utilization plan, marine EIA, status of CRZ clearance for Phase II, etc.
April 8-10, 2008, reconstituted TPP and coal mine EAC meeting (20th) recommended clearance to the Phase II TPP of APL. This was subject to CRZ clearance for the same.
May 29, 2008, MoEF awarded CRZ clearance for intake and disposal facility of Phase I of TPP.
June 6, 2008, GPCB gave CTE for Phase II of TPP.
August 12-13, 2008, reconstituted TPP and coal mine EAC meeting (28th) reconsidered the proposal for Phase II of TPP since while processing the clearance it was ‘observed that the wind
6 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
rose data provided for Phase I and Phase II of the project was a variance’. Clarifications were sought and after discussion the EAC recommended the proposal for clearance.
September 18-19, 2008, CRZ, infrastructure and miscellaneous projects EAC meeting (69th) discussed the CRZ clearance for intake and disposal facility of Phase I and II of TPP. It was informed that CRZ clearance has already been obtained for Phase I for the same purpose. The EAC noted that there is no change in the components proposed in the CRZ area and hence decided that the clearance granted on May 29 holds good for Phase II of TPP as well.
October 21, 2008, MoEF gave EC for Phase II of TPP. The letter states that the project is exempt from public hearing as the site is located in a notified power SEZ.
November 10-11, 2008, reconstituted TPP and coal mine EAC meeting (34th) gave ToRs for Phase III (1980 MW) of the TPP to APL. It was informed that Phase III will be run on blending of imported coal and Indian washed coal. It was also informed that the location is partly within the SEZ and partly outside.
January, 19, 2009, MoEF issued an addendum to the EC granted to waterfront development project on January 12, 2009. The addendum also made provision for laying down of intake and outfall system for the thermal power plant with revised locations.
August 3, 2009, GPCB gave CTE for use of outlet for discharge of effluent by Phase I of TPP.
September 10-12, 2009, reconstituted TPP and coal mine EAC meeting (54th) discussed the project, saying it is in Mundra SEZ and coal linkage is now from Mahanadi Coal Fields (70:30 ratio of imported: indigenous). Committee noted CRZ clearance has been accorded for Phase I and II of the project, while Phase III (1980 MW) is outside CRZ area. EAC recommended clearance of project in this meeting. The application form (Form 1) submitted to MoEF for Phase I by the project proponent states that the site boundary is at a distance of 500 meters (m) from the HTL while the plant facilities are at a distance of 1,700 m from HTL implying that both the Phases are outside CRZ. Thus it is unclear why it is mentioned that Phase I and II of the TPP have received CRZ clearance. Maybe the CRZ clearance received for intake and outfall facility for Phases I and II was being referred to here which has been incorrectly mentioned. But it is not clear on what basis was the distance of TPP from HTL submitted. NIO had carried out the HTL/LTL demarcation southwest of the thermal power plant site in 2005 (report release 2007). This demarcation is unclear since the setback line abruptly ends at the boundary of the thermal power plant (Refer to Section 5 on HTL).
December 21-23, 2009, EAC meeting (83rd) for CRZ, infrastructure and miscellaneous projects recommended clearance to the revised location of discharge channel and also to the coal handling system for transportation of coal by M/s Coastal Gujarat Power Limited (CGPL), Ultra Mega Power Project of Tata. It was informed that CGPL has received CRZ clearance by MoEF vide Letter No. 11-11/2007-IA-III dated April 25, 2007, for disposal and withdrawal of sea water in the CRZ area. CGPL submitted that APL has proposed a 660 MW TPP in the vicinity and in order to minimize impact and save cost, it is proposed that both the companies use common intake water channel being developed by MPSEZL. It was also informed that the location of the intake channel that was recommended by NIO will now be changed, due to engineering reasons. Because of this, the location of the discharge point will also have to change to minimize impact on plant efficiency and marine ecology. CGPL submitted a superimposed route of the channel on CRZ map prepared by SAC. Gujarat Coastal Zone Management Authority (GCZMA) recommended the project.
March 9, 2010, amendment to CRZ clearance granted for revised location of discharge channel to CGPL. The amendment states that CGPL and APL are to use a common intake channel.
7 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
March 12, 2010, Public hearing for Phase III held where people raised issues regarding salinity ingress, shortage of grazing land, blocking of creeks and impact on fishermen livelihoods.
March 19-20, 2010, reconstituted TPP and coal mine EAC meeting (67th) revisited the clearance given to the project because public hearing was held on March 12, 2010 based on MoEF letter, which it quotes in the EAC minutes. Public hearing was held because MoEF noted that “environmental clearance for SEZ wherein the project is to be located has not been accorded and therefore informed the project proponent that either they shall go for public hearing separately for expansion of power plant or EC for the SEZ shall be obtained before their project is processed for approval of EC.”
May 20, 2010, MoEF gave EC for Phase III of TPP.
June 25, 2010, GPCB gave CTE for Phase III of the TPP.
February 19, 2011, GPCB gave CTE for use of outlet for discharge of effluent by Phase II of TPP.
June 1, 2011, Corrigendum to the original EC granted to Phase III of TPP in March 2010. Coal quality ratio was corrected to domestic:international as 70:30 instead of 30:70.
2.3: Mundra SEZ, Forest and Airport Clearances
May 13, 2004, In-principle forest clearance was granted to Adani Chemicals Limited for diversion of 168.41 ha of forest land in only one consolidated patch in survey area number 169/36 for salt washery and desalination plant.
May 13, 2004, in-principle forest clearance was granted to Adani Chemicals Limited for diversion of 1840 ha of forestland for high purity salt works.
August 4, 2005, EC was granted to Adani Chemicals Limited for the establishment of high purity salt works, involving an area of 2946.22 ha, of this 1850 ha is forestland, for which the in-principle clearance was granted in May 2004. The Forest Clearance (FC) and EC letters specify that 10 ha of interspersed mangrove forest, which was deleted from the proposed area shall be transferred back to the state government and maintained at the project cost.
November 30, 2005, Gujarat Adani Port Limited (GAPL) obtained NOC from the Ministry of Defence for construction of private air landing strip.
January 10, 2006, GPCB asked for clarification from the Mundra SEZ Limited if “only airstrip or airport will be constructed.”
January 18, 2006, Mundra SEZ Limited replied saying, the proposed airstrip is to be used for landing private aircrafts and it is not meant to be used for commercial services as an airport in foreseeable future.
February 21, 2006, a letter from Mundra Special Economic Zone Ltd. to GPCB, clarified that the permission of the Director General of Civil Aviation (DGCA) is generally granted when the airstrip is ready for use. The permission from DGCA is not available as of information in hand with this Committee. However, on the website of DGCA (June 30, 2012), the “aerodrome” at Mundra is categorized as a licensed aerodrome . The EIA report of the multi-product SEZ mentions an airport spread over an area of 1200 ha as part of the project. The report also acknowledges that in order for the airstrip to carry out commercial operations, it will need permission. While an airport is definitely more established as a commercial place involving operation of commercial planes, the definitions of aerodrome and airstrip are vague. All
8 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
airports are aerodromes but the vice versa is not true. However, given that the DGCA has categorized the airstrip as an aerodrome, the definition issues are not important. In that case, under EIA notification 2006 (as amended in 2009), the project will need an EC if commercial operations are proposed. More importantly, if it is part of SEZ then it should not have been constructed without the SEZ having an EC.
March 4, 2006, GPCB issued a site clearance certificate to Mundra SEZ Limited for airstrip development at survey No. 52/53 of Village Goersana in Mundra.
June 23, 2006, Ministry of Commerce and Industry notified multi product SEZ under GAPL of 2406.7592 ha in Mundra and Anjar talukas.
September 6, 2006, Ministry of Commerce and Industry transferred the notified multi product SEZ under GAPL of 2406.7592 ha in Mundra and Anjar talukas to M/s Mundra Port and Special Economic Zone Limited.
May 10, 2007, Ministry of Commerce and Industry notified power SEZ under Adani Power Private Limited of 293.881 ha in Tunda and Siracha villages.
July 3, 2007, Ministry of Commerce and Industry notified an additional area of 251.4308 ha was notified as part of the SEZ.
September 28-29, 2007, CRZ, infrastructure and miscellaneous projects EAC meeting (57th) discussed EC for Multi Project SEZ (Phase 1B and Social Infrastructure) in Mundra, by MPSEZL. This meeting considerd the entire project, including waterfront development, to be in the SEZ. The EAC was of the view that the project proponent should get CRZ mapped by SAC and NIO.
June 23, 2006, Ministry of Commerce and Industry notified an additional area of 74.6145 ha as part of the multi product SEZ under MPSEZL.
May 2, 2008, Ministry of Commerce and Industry notified an additional area of 1074.1755 ha under the multi product SEZ in favor of MPSEZL.
August 11, 2008, Ministry of Commerce and Industry notified an additional area of 2113.7962 ha under the multi product SEZ in favor of MPSEZL.
January 31, 2009, CRZ, infrastructure and miscellaneous projects EAC meeting (73rd) finalized ToR for the development of Multi-Purpose SEZ (Phase 1B and Social Infrastructure). The project involves development of SEZ on plot area of 18,000 ha, of which 5,920.7762 ha is notified under SEZ. EAC also said it will take a view on holding of public hearing based on court and other data to be provided by company.
February 27, 2009, MoEF granted in-principle FC for 1840 ha and 168.41 ha of forestland to MPSEZL.
March 31, 2009, MoEF wrote to MSEZ on the finalized ToR.
April 23-24, 2009, CRZ, infrastructure and miscellaneous projects EAC meeting (75th) discussed the matter of public hearing of SEZ. EAC notes, “The proponent has submitted information regarding court cases and SEZ clearance and also stated that there is an Special Leave Petition (SLP) in the Supreme Court, however there is no stay order in any of the cases and requested for exemption from public hearing.” The EAC recommended to exempt the public hearing based on the details submitted. But it noted that projects coming within the SEZ in future, shall undergo the procedure as per EIA notification 2006.
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May 27, 2009, Ministry of Commerce and Industry renotified and consolidated the SEZ area of 6472.8684 ha.
September 30, 2009, Gujarat forest department wrote to MoEF on Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund requirement fulfillment by MPSEZ.
November 25, 2009, the possession of 1840 ha of forest land was given to MPSEZL for development of port based SEZ.
February 20, 2010, State Environment Impact Assessment Authority (SEIAA) granted EC to MPSEZ Utilities Pvt. Limited for the establishment of Common Effluent Treatment Plant (CETP) of 17 million litres per day (MLD) capacity within the notified SEZ.
February 20, 2010, SEIAA granted EC to Adani-Mundra SEZ Infrastructure Private Limited for the proposed Township and Area Development Project in Survey No. 141 in Mundra village. The project area of 255 ha required for development of social infrastructure such as housing colonies, hospitals, public amenities and other physical infrastructures is located within the non-processing zone of MPSEZ. The letter states that since the proposed project is Item No 8 of EIA notification of 2006 it does not need public hearing. The letter states clearly that the project proponent shall not obstruct the flow or encroach on River Bhukhi, which passes through project area. The natural drainage of the river cannot be altered or affected.
October 4, 2010: Gujarat High Court order under Special Civil Application (SCA) 12898 of 2010 and SCA 12903 of 2010 regarding public hearing. Fishermen and farmers and a group of residents from Gandhidham filed the SCAs. The grievance was that the public hearings for two projects were being organized on the same day October 5, 2010, at the same venue with a small time lag only. One of these was for the Mundra Port and SEZ Limited. GPCB justified that the location for public hearing (Luni village) is equidistant from both project sites and the project affected people are common and hence convenient. The High Court ordered that public hearing be conducted at the same time and venue for one project and till the time all objectors are heard it be carried on. If necessary, the hearing may continue the next day too. The hearing for the second project to then follow the first one at the same venue.
October 5, 2010, Public hearing for the project was held. Main concerns were SEZ notification and area requirement, status of CRZ clearance, mangrove destruction, blocking of creeks, gauchar land, fishermen access, etc.
April 16-17, 2012, CRZ, infrastructure and miscellaneous projects EAC meeting (111th) discussed the CRZ clearance for intake and outfall pipeline and desalination plant by MPSEZL. Under CRZ notification, only laying of the pipeline is permitted. It was informed that the ongoing court cases do not have any stay in the present project. EAC sought more information.
May 9, 2012: High Court directions on lack of EC in SEZ given. In December 2011, a Writ Petition (194/2011) was filed by Ranubha Rajmalji Jadeja and others against Alstom Bharat Forge and Kalyani Alstom Power, two companies setting up their plants within the Mundra SEZ. The allegation was that these units have started construction within the SEZ without the SEZ having received an environmental clearance. The companies argued that individually they do not require an EC since they do not fall under the purview of EIA Notification 2006. The High Court on May 9, 2012 ordered that these units immediately stop construction/implementation of their projects till the time the MPSEZ is granted an EC.
June 4-5, 2012, CRZ, infrastructure and miscellaneous projects EAC meeting (113th) for proposed Multi Product SEZ by MPSEZ. After discussion, EAC, “recommends the proposal for
10 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
environmental and CRZ clearance with the above conditions in the clearance letter for strict compliance by the project proponent.”
July 9-10, 2012, CRZ, infrastructure and miscellaneous projects EAC meeting (114th) mentioned the project by way of confirmation of minutes of 113th meeting. It was informed that of the 18,000 ha SEZ plot area, 8481.2784 ha is notified which was earlier mentioned as 5920 ha. The intake and outfall channel was discussed. It was informed that length of the intake is 5km and the location is on the eastern side of East Port basin (22o 48’ 30.76”N and 69o 46’ 34.06”E). For outfall, a 5.7 km length pipeline will be laid through the East port back up area and discharge on the western side of the East Port basin (22o 46’ 44.04”N and 69o 45’ 5.51”E). The proponent also submitted for change of name to M/s Adani Port and SEZ Limited.
October 12, 2012, the Ministry of Commerce and Industry denotified 1840 ha of Mundra SEZ .
October 26, 2012: Letter from MoEF to GCZMA to calculate SEZ area outside CRZ as per the approved CZMP. The Ministry brought out the fact that distortion of HTL is an allegation against the company as per representation received by MoEF, and since SEZ is not a permissible activity within the CRZ, it was necessary to get clarity.
January 1, 2013, GCZMA, in its 17th meeting, discussed the response to MoEF’s October 26 letter. Adani Port and SEZ Limited (APSEZL) made a presentation on notified area within SEZ and informed that 8481.2784 ha of notified SEZ has been recommended EC and CRZ clearance by EAC meeting of July 2012. Since Ministry of Commerce and Industry has denotified 1840 ha of forestland from SEZ area, present notified SEZ area is 6641.2784 ha. The minutes read that the “MPSEZ has also submitted the CRZ maps showing the total SEZ area and areas that fall, within CRZ boundary, which is prepared by Centre for Earth Science Studies (CESS), one of the authorized agencies by MoEF.” As per the CRZ map submitted, the notified SEZ and CRZ, including CRZ buffer is indicated and area given. Based on this, GCZMA upheld its recommendation for EC for the SEZ.
February 14, 2013: The High Court on February 14, based on a contempt petition ordered 12 units within SEZ to immediately stop operations till EC is granted to the SEZ. The company approached the Supreme Court for an appeal and the Court granted interim relief to Mundra SEZ by staying the High Court order on February 15.
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3. Examination of Issues: Specific Environmental Impacts
3.1: Diversion, Blocking of Creeks and Reclamation to Distort HTL
In all conditions for clearance it has been made clear that no creeks are to be blocked during the construction and operation of the project (see Table 1: Conditions for Creeks in Different Clearances). It has also been repeatedly conveyed that the natural drainage of the area should not be affected due to the project and no filling/reclamation of creeks is allowed.
Table 1: Conditions for Creeks in Different Clearances
Clearance date Condition stipulated for creeks/waterways
1. August 25, 1995: Adequate culverts should be provided for smaller creeks so that breeding grounds for General Cargo/Storage crabs, mud snappers and other marine organisms are not cut off by road construction activities.
2. September 20, 2000: Project proponent shall ensure that no creeks are blocked and the natural drainage of Port Expansion the area is not affected due to project activities.
Project proponent shall ensure that there will be no disposal of sullage and sewage, surface run offs and oil/grease spillage in the creeks.
Project proponent shall work out the maximum quantity of spilled material, which can find its way into the coastal waters, and their impact on aquatic life should be studied. A mitigation plan is to be then drawn out before operations commence. Action taken report to be submitted to MoEF.
No effluent or other liquid waste should be discharged into water bodies without proper treatment.
3. July 21, 2004: It must be ensured that the effluent/liquid wastes are not discharged into the seawater. Crude Oil Terminal
4. August 13, 2007: Phase I of The seawater intake structure shall be designed in a manner to ensure that continuity thermal power plant (TPP) of free flow of water in the two arms of Kotdi creek is not hampered.
5. May 29, 2008: CRZ Effluent discharge pipeline into Kotdi creek for dilution as per NIO recommendation. clearance for intake and disposal facility for TPP
6. October 21, 2008: The seawater intake structure shall be designed in a manner to ensure that continuity of Phase II of TPP free flow of water in the two arms of Kotdi creek is not hampered.
7. January 12, 2009: There shall be no filling up of the creek and reclamation of the creeks. Waterfront Development
8. February 20, 2010: The project proponent was ordered not to obstruct the flow of River Bhukhi SEIAA clearance to passing through the social infrastructure area and not do any encroachment of township and area the river. They were asked to take all necessary precautions/measures to ensure development that natural drainage of River Bhukhi is not altered/affected.
9. May 20, 2010: Activity of the power plant should not disturb the marine biology in the Kotdi creek and Phase III of TPP Gulf of Tunda. Continuous monitoring should be carried out on this account.
No water bodies including natural drainage system in the area shall be disturbed due to activities associated with setting up/operation of the power plant.
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF
12 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
In the environmental clearance of May 2008 for the intake and outfall of the thermal power plant, the condition states that the outfall pipeline will open in the Kotdi creek for dilution as per NIO recommendation in its 2006 EIA.1 All other related clearances, state that the water intake structure should be designed in a way that it does not affect the flow of water in both arms of the Kotdi creek or its marine biology.
In addition, the SEIAA clearance of February 2010 states that the project proponent is not to obstruct the flow of the River Bhukhi passing through the social infrastructure area nor affect its natural drainage.
EAC has discussed creek blocking and reclamation many times. While recommending clearance for the waterfront development in December 2008, the EAC imposed a condition that there shall be no filling of creeks or reclamation affecting it. In several other meetings, the impact of water withdrawal on mangroves, widening of creeks, discharge of effluents in creeks/water bodies, etc., was discussed.
3.1.1: Observations on Blocking of Creeks by Monitoring Committees/Courts
The issue of creek blocking has been discussed and reported by different agencies.
Gujarat Coastal Zone Management Authority (GCZMA) 2006: In May 2006, GCZMA first discussed the issue of destruction of mangroves based on newspaper reports. It formed a sub- committee headed by Prof Nikhil Desai, director of Gujarat Ecological Education and Research (GEER) Foundation, who reported that the company has built many bunds in the inter-tidal area and blocked many creeks feeding water to the mangrove patches.
Ministry of Environment and Forests (MoEF) December 2010: An inspection team under one of the Ministry officials was sent based on complaints from local people. The report presented after the visit, found many instances of non-compliances. Observations included large scale reclamation, using dredged material on mangrove area behind the West and North port sites, laying down of a pipeline in the inter-tidal zone obstructing the tidal flow affecting mangroves, large scale destruction of mangroves especially at the north port site, obstruction of creek systems and natural flow of seawater because of reclamation.2
3.1.2: Examination of Issue by this Committee
The Committee carried out an analysis based on satellite imagery (Landsat 5 TM) and Google Earth imagery from different years. A few points were identified based on the allegations by local communities (Baradi Mata, Kotdi creek, creeks north of Bocha Island, etc.).
Baradi Mata creek mouth (January 2005 and June 2010): Baradi Mata creek has witnessed a distinct change at its mouth where the creek meets the sea. In 2005, the creek mouth had a natural outfall into the sea (see Figure 1: Satellite Imagery of Baradi Mata Creek Mouth). In 2010, the creek opening shifted and got constricted. This is clearly because of construction for the Water Front Development Project (WFDP). Under the EC conditions, no changes in creek or creek mouth are allowed. If no remedial action is taken urgently, there is danger of closing of the creek mouth due to accretion.
North of Bocha island (January 2005 and June 2010): The creek branches (proposed North port site) have completely disappeared over the years (see Figure 2: Satellite Imagery of Bocha Island). This is bound to have an impact on the mangrove vegetation in the area in addition to the change in hydrological regime. Also a water body, north of the Bocha Island, visible in the 2005 image is not visible in the 2010, pointing towards a loss of the same.
13 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Figure 1: Satellite Imagery of Baradi Mata Creek Mouth
Changes in creek mouth post development at South port site.
Source: Analysis by National Centre for Sustainable Coastal Management, Chennai, March 2013
Figure 2: Satellite Imagery of Bocha Island
Creeks and water body north of Bocha disappeared over time.
Source: Analysis by National Centre for Sustainable Coastal Management, Chennai, March 2013
14 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Kotdi creek mouth (January 2005 and June 2010): A general accretion is observed which could be due to construction in the nearby inter-tidal area. This has led to widening of the mouth (see Figure 3: Satellite Imagery of Kotdi Creek Mouth). There does not appear to be any major change in the Kotdi creek network (see Figure 4: Satellite Imagery of Kotdi Creek Network).
Figure 3: Satellite Imagery of Kotdi Creek Mouth
No major change observed at Kotdi creek mouth.
Source: Analysis by National Centre for Sustainable Coastal Management, Chennai, March 2013
Figure 4: Satellite Imagery of Kotdi Creek Network
No major change observed in Kotdi creek network.
Source: Analysis by National Centre for Sustainable Coastal Management, Chennai, March 2013
15 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.1.3: Observation and Recommendation of this Committee
The Committee is clear that there have been huge changes in the landscape of the Adani Port and SEZ area, including changes in the creeks – crucial to ensure the health of the mangroves and water system of this marine outfall area. These have been noted over the years by different committees which have visited the site during construction.
This Committee has visited the area in January 2013, after construction and development had been completed for key activities. The major creeks, as viewed from the lighthouse – which gave the Committee a vantage point – did open out into the sea, suggesting that no major creek mouths were blocked.
However, the Committee did note that there were creeks showing signs of damage, because of soil deposition blocking access of seawater into the area. Over time and without adequate mitigation efforts, this would block the creek and lead to eventual death of mangroves, depending on the inter-tidal water action.
For instance, at a site near the lighthouse (South Port), villagers accompanying the Committee, during the January 2013 visit, informed that the Baradi Mata II creek has been blocked (22° 45’ 36.564”N, 69° 40’ 17.706”E). The Committee saw stagnant water. The Committee decided to walk along the bund parallel to the creek and found blockage at another point near the NIO 2000 HTL board (22° 45’ 44.096”N, 69° 40’ 28.061”E). The Committee discussed that the creek may have been blocked due to the filling of the area adjacent to the High Court contempt area (22° 45’ 48.340”N, 69° 40’ 7.516”E). This was also discussed with the company representatives accompanying the team, who said they were prepared to take urgent remedial action to protect the area.
The examination of the issue through satellite imagery has confirmed that there are indeed cases of creeks being blocked (North port) and of creeks in danger of being blocked (South port).
In the case of North port, the responsibility is not clear, as APSEZ maintains that the area is under Gujarat Maritime Board (GMB). The Committee wrote to GMB, seeking clarification. The response is unclear about the responsibility for the creek reclamation at the proposed North port site. The Committee is clear that creeks have vanished in this area and there is clear violation of EC conditions.
In the case of South port, the accretion is evident and this suggests that there is every possibility of eventual blocking of the creek mouth, unless urgent action is taken.
The Committee recommends the following:
1. The North port area, adjoining Bocha has connecting creeks, critical for maintaining inter-tidal action of the region. This area should be protected and all creeks and waterbodies restored and brought to pre-2005 status including that reclaimed by GMB/APSEZL. The entire area should be declared as a conservation zone, as it is contiguous to Bocha island and its important mangrove system. This conservation zone should be clearly earmarked and demarcated using lat-long so that monitoring is possible.
2. The opening of Baradi Mata creek should be kept protected so that it is not damaged or blocked. This must be done for all other creek systems.
16 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.2: Destruction of Mangroves and Leveling of Sand Dunes
The conditions set at the time of clearance have made it clear that mangroves would not be destroyed during and after the construction of the project (see Table 2: Conditions for Mangroves in Different Clearances). Only the July 2004 clearance for the oil terminal, states that 0.25 ha of mangrove will be destroyed during the laying of pipelines, which will be compensated through afforestation. No other mangrove area can be destroyed.
Table 2: Conditions for Mangroves in Different Clearances
Clearance date Condition stipulated for mangroves
1. August 25, 1995: 100 metres (m) mangrove belt should be created all along west of Navinal creek till its General Cargo/Storage junction up to new road.
Green belt of 50 m along periphery of plant and road (at 1500 trees per ha); in consultation with forest department (FD); details to be sent to MoEF.
2. September 20, 2000: Mangrove afforestation shall be undertaken at the identified sites and progress report Port expansion to be sent to MoEF; all recommendations of NIO for restoration of the coastal habitat by mangrove afforestation at Navinal Island to be strictly implemented.
Project proponent to ensure that construction workers do not cut mangroves for fuel wood, etc.
While dumping the dredged material sufficient distance should be ensured from the existing mangroves so that there is no damage to the ecology.
3. July 21, 2004: EIA prepared by NIO estimates that 0.25 ha of mangrove habitats would be destroyed Crude oil terminal due to laying of pipelines. Mangrove plantation in 25 ha after identification with FD.
Green belt development in 30 acres of land in and around the project.
Camps for labour to be outside CRZ; arrangements for cooking so that mangroves are not cut/destroyed for this purpose.
Since the pipeline passes along mangrove area and the mud flats of Mundra area, project proponent will ensure adequate protection to the mangroves.
4. February 5, 2007: The project proponent should not undertake any destruction of mangroves during Multipurpose berth construction and operation of the project.
The sand dunes and mangroves should not be disturbed in any way.
5. August 13, 2007: Phase I There should be no adverse impact on mangroves due to the project. of TPP
6. May 29, 2008: CRZ for There should be no adverse impact on mangroves/sensitive coastal ecosystems. If any intake and disposal of TPP damage to mangroves is anticipated or envisaged as a result of project activities, the CRZ clearance will be canceled and project proponent will need to seek fresh approval from the Ministry.
7. October 21, 2008: There should be no adverse impact on mangrove due to the project. Phase II of TPP
Continued…
17 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Table 2: …continued
Clearance date Condition stipulated for mangroves
8. January 12, 19, 2009: The proposed expansion of the existing channel affecting mangroves was dropped. Waterfront Development As per the Marine EIA for Waterfront Development, prepared by NIO in July 2008, the proposal of expansion involved dredging of the Bocha creek existing at -5m Chart Datum (CD) in the entrance, and +6.5 m CD at the distant end, to a depth of -17.5m CD with two turning circles of 550 m each.
Bocha Island (88 ha); East of Bocha Island (155 ha) and Kotdi Mouth (981 ha) and Mouth of Baradimata (30 ha) have been identified as conservation zones to be maintained by Horticulture department, Mundra.
Project proponent has already undertaken 1000 ha of mangrove afforestation and will do additional 200 ha.
No existing mangroves shall be destroyed during construction/operation of project.
The sand dunes, corals and mangroves, on the site shall not be disturbed in any way.
9. May 20, 2010: Project proponent to prepare action plan within three months for regeneration of Phase III of TPP mangroves with financial commitment for the same.
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF
In addition, as per the EC of January 12, 2009, four areas have been earmarked as mangrove conservation areas: Bocha Island (88 ha); East of Bocha Island (155 ha) and Kotdi Mouth (981 ha) and Mouth of Baradimata (30 ha). In other words, a total of 1,254 ha should be strictly protected and regenerated.
3.2.1: Observations on Mangroves by Monitoring Committees/Courts
The issue of mangrove destruction has been discussed time and again by different agencies. In many cases, mangrove destruction has been noted; it has also been said that there is a need for third party audits to ensure afforestation is being done and remedial action has been called for.
GCZMA, May 2006: A GCZMA sub-committee headed by Prof Nikhil Desai, director of GEER, reported “rampant destruction of mangroves by Adani Group.” The report also mentioned that the company had built many bunds in the inter-tidal area and blocked many creeks feeding water to the mangrove patches. In addition, mangroves had also been cut for laying pipelines and construction of roads; and mangroves in Bocha island have been cut. Based on this report, GCZMA on June 9, 2006, issued a show cause notice to the company on the destruction of mangroves because of developmental activities at the port site. The notice served asked the company for a clarification within 15 days on the alleged non-compliance with the EC conditions on mangroves. Based on representations by the Company, GCZMA on May 31, 2008 directed for compensatory afforestation over five ha of area for the violation of mangrove destruction of a 0.35 ha.3
MoEF, December 2010: The team, headed by a Ministry official observed large scale reclamation using dredged material on mangrove area behind the West and North port sites; laying down of a pipeline in the inter-tidal zone obstructing the tidal flow affecting mangroves; large scale destruction of mangroves, particularly at the north port site. Based on this report, show cause notice was issued and the matter is still pending.4
High Court Committee headed by District Collector (Kutch), October 2011: The Collector Committee was directed to check compliance with High Court order of July 12, 2011 that no
18 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
mangroves would be cut in the project area post the order. The Collector committee observed dead mangroves and signs of movement of heavy machinery in many sites. But what the committee could not conclude was the period of destruction of mangroves, whether prior or after the High Court order.5
3.2.2: Examination of Issue by this Committee
This Committee carried out an analysis based on satellite imagery (Landsat 5 TM) and Google Earth imagery from different years. This was done to ascertain the changes in mangrove cover in the project area, particularly in the conservation areas stipulated under EC conditions as well as those areas where local communities had alleged destruction.
Mangrove along Navinal creek: As per the EC granted in August 1995, for general cargo and storage at Navinal, a 100 meters mangrove belt was to be created west of the Navinal creek. There is a very clear mangrove patch along the west of Navinal creek in the year 2005 (see Figure 5: Google Earth Imagery of Navinal dated December 7, 2005) but the same has vanished in 2011 (see Figure 6: Google Earth Imagery of Navinal dated April 6, 2011).
This is in violation of not just the EC condition on mangrove destruction but also the specific EC condition related to Navinal. The Committee also observed previously cut remnants of a few mangroves during their January 2013 visit in the same area (22° 44’ 59.389”N, 69° 42’ 17.842”E).
Mangrove destruction and Bocha conservation area of 88 ha (January 2005 and June 2010): The ‘head’ portion of Bocha Island is a mangrove conservation area as per the EC granted in January 2009 for waterfront development (see Figure 7: Satellite Imagery of Bocha Island).
Figure 5: Google Earth Imagery of Navinal dated December 7, 2005
Mangrove belt along Navinal creek in 2005.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
19 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Figure 6: Google Earth Imagery of Navinal dated April 6, 2011
Evident destruction of the mangrove belt along Navinal creek in 2011.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
Figure 7: Satellite Imagery of Bocha Island
Loss of 75 hectare of mangrove cover in Bocha Island.
Source: Analysis by National Centre for Sustainable Coastal Management, Chennai, March 2013
20 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
The satellite imagery analysis, done by scientists from the National Centre for Sustainable Coastal Management shows that there has been a loss of seven ha of dense mangrove and 68 ha of sparse mangrove implying that a total of 75 ha of mangrove in Bocha Island have been lost. The area over mudflat has increased from 21 ha in 2005 to 74 ha in 2010. The navigation creek area has increased from 58 ha in 2005 to 66 ha in 2010. The loss is concentrated on east of Navinal creek and southeast of the tip of the island which is the conservation area. The modification in the island size and vegetation cover could be attributed to erosion because of vessel movement from the Navinal port, and clearly shows that the company had not taken any precaution to safeguard this conservation area. In such a scenario, if the proposed North port is developed, it will exacerbate the loss of mangroves and the area of the island, as it would involve vessel movement on both sides.
The reduction in the area of the tip of the Island is confirmed when Google Earth imagery is geo-referenced for this location. The coordinates when compared for 2005 (see Figure 8: Bocha Tip Google Earth Imagery dated February 14, 2005) and 2011 (see Figure 9: Bocha Tip Google Earth Imagery dated April 6, 2011) show that a particular coordinate which was land area in 2005, in 2011, at the same lat-long the location falls into the sea.
Bocha and proposed North port site: If the Bocha Island is considered with the contiguous area of the proposed North port site, then also mangrove destruction/loss can be noted. As per 2005 imagery, the Island appears as an almost contiguous patch with the mangroves at the proposed North port site on its northeast (see Figure 10: Bocha Island Google Earth Imagery dated February 14, 2005). Also, very dense mangrove can be observed at its tip, periphery and along
Figure 8: Bocha Tip Google Earth Imagery dated February 14, 2005
0.51 Km 1.1 Km
Conservation area at Bocha Island as visible in 2005.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
21 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Figure 9: Bocha Tip Google Earth Imagery dated April 6, 2011
1.07 Km
0.32 Km
Loss of land area (mangrove) from the Bocha conservation area.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
Figure 10: Bocha Island Google Earth Imagery dated February 14, 2005
4.39 Km
1.03 Km
Bocha and North port site mangrove area as a contigous patch.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
22 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
the small creeks flowing into the island on all sides. Rest of the island could be classified as having sparse mangrove and mudflat.
According to the 2011 imagery, the mangroves at the proposed North port site have completely vanished (see Figure 11: Bocha Island Google Earth Imagery dated April 6, 2011). Also, there is a stark reduction along the tip of Bocha. Just near the north port site (22o 46' 10.68”N, 69o 41’ 46.8”E), an entire patch of mangrove has disappeared. The creek has disappeared clearly due to the reclamation work at North port site. This has caused the water to accumulate and has formed a small water body-like structure.
Figure 11: Bocha Island Google Earth Imagery dated April 6, 2011
4.27 Km
0.9 Km
No mangrove left at the proposed North port site after reclamation of the area.
Source: Analysis by Centre for Science and Environment, New Delhi, March 2013
During the Committee visit to the proposed north port site in January 2013, the company had explained that GMB had carried out the reclamation work at the proposed North port site. In GMB’s response to the Committee, it has remained unclear if GMB is indeed responsible for this ‘reclamation’. As asked by the Committee, GMB did not provide any cost estimates for carrying out this work. Instead, GMB states6, “Regarding North port location of Mundra port, our team has visited the area and reclamation done in the past has been noticed. As far as the reclamation on the land owned by Gujarat Maritime Board is concerned, the acquisition process for the entire Bocha Island was under process before it was finalized.” The GMB goes on to add “the area under question as a part of Bocha Island, it may be emphasized that it didn’t have much vegetation in the early 1990 as per topo-sheet No. 41F/9 and F/10 of the Survey of India. You may appreciate that growth of such coastal vegetation and mangroves expand over the period and also enter in the area of acquisition as acquisition process takes long time.7”
In other words, GMB has not clarified but prevaricated on this matter. It’s response does not sufficiently explain if it is doing the reclamation on the area in question, and if so, has it got the necessary environmental clearances. It has also not explained on what land reclamation is being done and which areas now have vegetation, which was not there earlier.
23 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
It is important to note that the proposed North port was granted EC in January 2009. Thus, it is not clear why the mangrove situation of 1990 is being discussed by GMB. But however, in the same correspondence, GMB contradicts itself by stating, “In the present case, any compensatory afforestation as may be suggested, the same may also be realized.8” In other words, they admit that there could be possible violations and if that is the case then they will make good, by planting more.
Mangrove conservation near Baradi Mata mouth: In its field visit in January 2013, the Committee noted places where degradation of mangroves was visible and if corrective action was not taken, it could lead to irreversible loss. The Committee observed this in the mangrove conservation area near the lighthouse at the South port (22° 45’ 22.680”N, 69° 40’ 13.724”E). There because of construction and reclamation activity, gradual deposition of sand was observed to have taken place, which was blocking small creeks. This would eventually lead to mangrove destruction. The company had clearly not taken precaution to ensure protection of mangroves. This is a clear violation of EC conditions. The Committee noted that it was important to build a bund along the mangrove conservation area, which would provide buffer and allow for water inflow without any impediment. The NIO representative accompanying the Committee informed that at least a distance of 50 metres should be left from the mangrove patch to build the bund.
3.2.3: Observation and Recommendation of this Committee
The EC conditions on the issue of mangrove destruction are stringent and non-negotiable. Each clearance that has been given to the project, has clearly mentioned that mangrove destruction is not allowed. It is the responsibility of the project proponent to ensure that during and after reclamation, construction or operation, no mangroves are lost.
In its examination of the specific ToR on the destruction of mangroves and leveling of sand dunes; the Committee has used satellite imagery and Google Earth maps. The objective is to ascertain the changes in the mangrove area in the past seven years, since clearances were given.
It is clear from the examination of material at hand, including reports of past committees, which observed changes during the period of construction and reclamation, that there is evidence of destruction of mangroves. This is undisputable in our view.
The Committee recommends the following:
1. Bocha island and its conservation zone must be protected at all costs: It is clear that there is a possibility of further degradation of the remaining mangrove areas in the conservation zone. This is not acceptable. The Committee has identified the contiguous conservation area (See map). This area should be georeferenced with lat-long and put in public domain. There should be regular monitoring on the status of land mass and vegetation of the island.
2. The North port, which has received environmental clearance under the waterfront project, should be cancelled: This proposed port is on the other side of Bocha island. Already, ship movement to and from Navinal port, which borders the island has had serious deleterious impact on the protected mangroves. This is visible both in terms of the loss of mangroves in the vicinity of the Navinal port as well as the loss of vegetation and land area of Bocha island.
It must be noted that the Marine EIA of the Waterfront Development Plan, prepared by NIO in 2008, had mentioned that mangroves are dense in portion of the area considered for the channel for North port. It therefore, said that adequate care should be taken to ascertain that the shore protection of the western bank of the Bocha creek does not induce erosion of the inter-tidal area.9 These measures are needed to protect the dense mangroves of Bocha
24 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
island bordering the high tide level as well as island formation. To do this, NIO recommended that dredging of the Bocha creek should be planned so that the eastern shore (North port side) is not disturbed.
The protection of the channel would require specifications for the turning circle and depth, as that sets limits on the size of ships that can enter the area. The EIA document says that the company proposes to dredge to a uniform depth of -17m CD with two turning circles of 550 m each.10 The company also proposed to expand the width of the channel. The EC, while dropping the expansion, has allowed two turning circles of 550 m each and also dredging to a slightly deeper uniform depth of -17.5 m. This is seemingly contradictory, as it would have the same result, and lead to destruction of mangroves.
It is also important to consider that if indeed protection has been provided in the EIA and EC condition, it is inadequate. The satellite imagery shows sharp decline in the area and vegetation cover of the island. Therefore, it is necessary to take even more stringent measures for Bocha conservation, including the cancellation of North port.
The North port area, adjoining Bocha exhibits mangrove in the year 2005. This area, as a contigous mangrove patch with Bocha Island, should be protected and all mangroves in the area be restored and brought to pre-2005 status including that reclaimed by GMB/APSEZL. The entire area should be declared as a conservation zone, as it is contiguous to Bocha island and its important mangrove system. This conservation zone should be clearly earmarked and demarcated using lat-long so that monitoring is possible (see Figure 12: Proposed Conservation Zone to be Brought Back to 2005 Condition).
3. The mangrove conservation area near the mouth of Baradi Mata must be protected and regenerated: An embankment to stop soil deposition into the creek, with buffer between the mangrove area and reclaimed land, should be made.
Figure 12: Proposed Conservation Zone to be Restored to pre-2005 Condition
Mangroves at Bocha Island and proposed North port site seen as a contiguous patch in 2005
Source: Analysis by Centre for Science and Environment, New Delhi, April 2013
25 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
4. All identified mangrove conservation areas as per the EC of January 2009 must be protected with adequate measures against erosion: These areas should be marked with lat- long so that regular monitoring for compliance, based on high-resolution maps, can be made publicly available.
5. An action plan for protection of all mangrove conservation areas including the proposed mangrove conservation area, may be prepared and put in public domain, within three months, for monitoring.
26 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.3: Handling of Fly Ash
In clearances granted to the thermal power plant by MoEF and the CTEs given by GPCB, the issue of fly ash management and disposal has been emphasized (see Table 3: Conditions for Fly ash Utilization/Disposal in Different Clearances).
Table 3: Conditions for Fly ash Utilization/Disposal in Different Clearances
Clearance date Condition stipulated for Fly Ash
1. January 29, 2007: CTE by Company should comply with fly ash notification. GPCB for Phase I of TPP
2. August 13, 2007: Fly ash should be collected in dry form, and it should be ensured that 100 per cent of it is EC for Phase I of TPP utilized from the day of the commissioning of the plant. In case of emergency, the utilized ash may be disposed in the ash pond through High Concentration Slurry Disposal system.
Regular monitoring of ground water quality including heavy metals should be undertaken around the ash dyke to check for leaching of contaminants from ash disposal.
3. June 6, 2008: CTE by GPCB Company should comply with fly ash notification. for Phase II of TPP
4. October 21, 2008: Fly ash should be collected in dry form and it should be ensured that 100 per cent is EC for Phase II of TPP utilized from the day of the commissioning of the plant. In case of emergency, the utilized ash may be disposed in the ash pond through High Concentration Slurry Disposal system.
Regular monitoring of ground water quality including heavy metals should be undertaken around the ash dyke to check for leaching of contaminants from ash disposal.
5. May 20, 2010: 100 per cent fly ash collection and utilization from day one of the operation of the plant. EC for Phase III of TPP Status of implementation should be reported to the Regional Office of the Ministry from time to time.
Ash pond should be lined with HDP/LDP lining or any other appropriate impermeable media so that no leaching occurs. No dumping of flyash is permitted in low-lying areas.
Fly ash to be stored in dry form and storage facility (silo) should be provided. Unutilized fly ash to be disposed off in slurry form in the ash pond area.
6. June 25, 2010: CTE by Unit should have a fly ash handling system. GPCB for Phase III of TPP Company should comply with fly ash notification.
7. February 19, 2011: CTE of Proper utilization of fly ash ensured as per the Fly Ash Notification 1999 GPCB for use of outlet for and the amendment in 2003. the treated effluent
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF and consents by State
Expert Appraisal Committee (EAC), MoEF: The meeting in February 2008, that discussed the clearance of Phase II of the TPP, required detailed plan of fly ash utilization to be produced by the company before further decisions could be made. The meeting held in November 2008, concerning the clearance of Phase III of the TPP, also required plans for the same. Meetings in September 2009 and March 2010 emphasized 100 per cent utilization of fly ash generated from Phase-I and II. It was further indicated that fly ash from Phase-III should also be fully utilized from day one of operation.
27 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.3.1: Observations on Fly Ash Utilization/Disposal by Monitoring Committees/Courts
Gujarat Pollution Control Board Inspection, 2011: A site inspection was undertaken by GPCB on April 8, 2011.11 The site visit was organized as a result of a complaint filed by residents of nearby villages. The visit indicated that fly ash generated from the plant was being collected in fly ash silo. Regarding utilization of fly ash, it was observed that about 17 per cent of the total fly ash generated (7,512 MT of 43,639 MT fly ash generated) was being sent to cement manufacturing industries.
GPCB inspection also revealed that about 27,127 MT of fly ash was found to be disposed off in low-lying areas of MPSEZ between APL and West port (as per the EC condition for phase III of project, no disposal is allowed in low-lying area). Disposal of fly ash in the low-lying areas was going on through open dumpers. Fugitive emission was observed due to movement of fly ash loaded dumper and other heavy vehicle during the GPCB site visit.12 The company was also required to sprinkle water and ensure regular wetting of ground to curb generation of dust.
Following such observation, GPCB issued a directive to the company on April 18, 2011, regarding controlling of fugitive emissions. The company was directed to carry out compliance actions for fugitive emissions within 15 days of the issuance of the directive. However, no follow up is reported to check for compliance with these directions.
3.3.2: Examination of Issue by this Committee
3.3.2.1: Quantum of fly ash: As per the application made to MoEF, Phase I operations of the TPP (660 MW) is based on imported coal at 6,000 tonnes per day (TPD) rate, which is 1.98 million tonnes per annum (MTPA).13 Its ash content is reported to vary between 5-8 per cent. Fly ash generation as per the application form submitted by the company to MoEF is 368.64 TPD (0.12 MTPA). The EIA report states that ash will be generated at the rate of 480 TPD (0.16 MTPA).14 While the application form states that fly ash will be utilized/managed in cement/brick manufacturing units and in land filling/ construction at the project site, it also says that all the fly ash – 368.64 TPD – would be sent to cement industry.
As per the EC granted to Phase II of the TPP, 6 MTPA of imported coal of four per cent ash content will be used. The EIA for Phase II states that 6.4 MTPA imported coal with ash content of 4.5 per cent will be used for power plant operations.15 This is based on coal analysis done in February 8, 2008, by Inspectorate Pvt. Ltd. (Singapore), with one coal sample imported from Indonesia. The ash content in the sample as per the analysis was indicated to be 3.59 per cent.
As per the EC granted for Phase III on May 20, 2010, coal utilization is 8.39 MTPA just for this phase. The coal ratio of 30 per cent domestic and 70 per cent imported is indicated. However, MoEF issued a corrigendum on June 1, 2011 to the Phase III EC amending the domestic coal utilisation as 70 per cent and international coal as 30 per cent. Domestically the coal will be sourced from Mahanadi Coalfields Ltd. (MCL). The marine EIA for Phase III prepared by NIO states that the primary fuel (9.6 MTPA) used will be domestic, sourced from Korba/Talcher.16 The ash content for Phase III has not been specified, but the marine EIA mentions that 35 per cent of the coal will be ash.17 This is merely an assumption. Therefore the real ash content of coal is not available in the absence of proximate or ultimate analysis. The ash content in domestic coal is typically high, as much as 45 per cent.18
The Committee has analyzed the total quantum of fly ash production in the TPP as follows. This estimation is based on 80 per cent plant load factor (PLF) as it is done to estimate the quantity that will need to be planned for. The Company has informed the Committee that currently it is working at 65 PLF because of paucity of coal.
28 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Coal utilization for Phase I: 1.98 MTPA Ash content in the coal: 8% Therefore total ash content: 8% of 1.98 MTPA = 0.16 MPTA 80% of ash is fly ash: 80% of 0.16 MTPA = 0.13 MTPA
Coal utilization for Phase II: 6 MTPA Ash content in the coal: 4% Therefore total ash content: 4% of 6 MTPA = 0.24 MPTA 80% of ash is fly ash: 80% of 0.24 MTPA = 0.19 MTPA
Coal utilization for Phase III: 9.6 MTPA Coal mix: 70% domestic (6.72 MTPA) and 30% international (2.88 MTPA) Ash content in the domestic coal: 35% Ash content in the international coal: 4% Total ash content from domestic coal: 35%-45% of 6.72 MTPA = 2.4 – 3.02 MTPA Total ash content from international coal: 4% of 2.88 MTPA = 0.12 MTPA Total ash = 2.52 MTPA – 3.14 MTPA 80% of ash is fly ash: 80% of 2.52 MTPA = 2.02 – 2.52 MTPA
The total fly ash generated from the TPP (all phases) will range from 2.3 to 2.8 MTPA.
The total ash generated will be 2.8 to 3.4 MTPA.
The quantum of fly ash generated has changed dramatically since the commissioning of phase III, which is based on domestic coal, with substantially higher ash content – 35-45 per cent as compared to 4-8 per cent in imported coal. The source of coal will determine the quantum of fly ash and given the present coal crunch any blending of coal from different Indian coal fields will change the fly ash composition.
3.3.2.2: Fly ash management: According to the Phase III EIA report, the plant has proposed a ash-handling system (AHS), which would be equipped to handle top and bottom ash separately.19 The AHS is designed taking into consideration worst coal consumption at full load and considering that 80 per cent of total ash generation will be fly ash. The fly ash handling system of the plant is expected to continuously remove fly ash from the electrostatic precipitator hoppers and store it in silos, which thereafter will be carried out using pneumatic conveying system.
According to the EIA report prepared by Telos Consultancy for Phase I, fly ash will be collected in dry form in one silo of 15 hour holding capacity.20 According to the Phase III EIA report, two fly ash silos shall be provided for a capacity of 16 hours each for the storage of fly ash generated.21
3.2.2.3: Fly ash utilization and/or disposal: ECs granted to all phases of the power plant emphasize on 100 per cent utilization of fly ash. Meetings of the EAC, held on September 10, 2009 and March 19, 2010 also emphasized that fly ash generated from Phase III operation should be fully utilized from day one.
Even though 100 per cent utilization is directed, the EC conditions also lay down that the unutilized fly ash from plant operations will be disposed off in slurry form in the ash pond area. Monitoring of ground water quality including heavy metals should be carried out around the ash dykes to check for leaching of contaminants from ash disposal. In the EC for Phase III, because of the use of domestic coal with high heavy metal content, an additional condition is imposed that flyash disposal or use will not be allowed in low-lying areas, as there is danger of groundwater contamination.
29 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Adani Power has been asked by MoEF to submit its fly ash utilization plan for different phases. In March 2008, the company submitted its plan for the Phase I and Phase II. Under this plan fly ash generation is 0.2499 MTPA of which 20 per cent will be utilized in the 1st year. There would be a 10 per cent increase in utilization every year, reaching 100 per cent in the 9th year. The fly ash would be commercially used by cement industries; the company had already signed MoU with Sanghi Cement and Hazelberg Singapore Pvt. Ltd.22 EIA report of Phase III expansion of the power project also confirms such agreement.23 The unutilized ash would be diverted to ash storage yard. An area of 24 ha with storage capacity of 2.16 million tonnes has been proposed for the storage of diverted ash as per the ash utilization plan.24
The question then is how much is being generated and how much is utilized?
The company provided fly ash generation and utilization estimates to GPCB, following its site visit on April 8, 2011.25 According to details provided by the company to GPCB, about 0.044 million tonnes of fly ash was generated in March 2011, out of which about 0.0075 million tonnes was sent to cement manufacturing industries and 0.027 million tonnes was disposed off in low-lying areas of MPSEZ.26 In this case, in 2011, utilization was 79 per cent of total monthly fly ash generated, with only 17 per cent going to cement industries.
These figures do not reconcile with compliance reports filed by Adani Power to MoEF stating that between 2010 to 2012 fly ash utilization was 100 per cent. In 2013, the company has reported for the first time a slight drop in utilization to 90 per cent.27
On its visit to Mundra in January 2013, the Committee asked for details on utilization of fly ash. According to the information provided by the Company to the Committee, 45 per cent of the fly ash is utilized by the cement industry, eight per cent by the brick/construction sector, 37 per cent for the reclamation of low lying area, and 10 per cent in ash dykes (see Table 4: Fly ash Utilization and Disposal (in tonnes) (April 2012-December 2012)).
The Committee then asked for details of the cement companies where the fly ash had been used and also a confirmation on the quantum received by them for verification of the same. GPCB
Table 4: Fly ash Utilization and Disposal (in tonnes) (April 2012-December 2012)
Month Cement Brick/ Reclamation of Ash Dyke Total Percent Construction Low Lying Areas Utilization
Apr 40912.0 7549.0 15063.0 6445.0 69969.0 90.8
May 40668.0 7239.0 17434.0 7287.0 72628.0 90.0
June 40978.0 6518.0 17948.0 8214.0 73658.0 88.8
Jul 35540.0 7374.0 23313.0 7342.0 73569.0 90.0
Aug 34252.0 4326.0 12599.0 6211.0 57388.0 89.2
Sep 35499.0 7360.0 28627.0 7342.0 78828.0 90.7
Oct 43641.0 6993.0 45812.0 8793.0 105239.0 91.6
Nov 35097.0 7233.0 52034.0 12811.0 107175.0 88.0
Dec 43361.0 8439.0 70520.0 11657.0 133977.0 91.3
Total 349948.0 63031.0 283350.0 76102.0 772431.0 90.1
Source: Information submitted by Adani Power to Committee during its January 2013 field visit
30 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
provided information, as it received from cement companies; which accounts for roughly half the fly ash generated during the year (see Table 5: Monthly Ash Quantity Dispatched to Cement Plants (in tonnes) (April 2012-February 2013)).
Table 5: Monthly Ash Quantity Dispatched to Cement Plants (in tonnes) (April 2012-February 2013)
Monthly Ambuja Ultratech Fly Ash Jaypee Binani Total Cement Cement Resources Cement Cement Others Monthly to Cement
Apr 8824.9 3324.2 8831.9 6917.3 1233.2 11780.5 40912.0
May 12920.6 4171.2 7457.4 6850.8 1320.6 7947.6 40668.0
June 14923.7 5058.0 6695.9 7273.6 1274.8 5752.1 40978.0
Jul 11745.2 6498.4 6500.5 4884.2 2005.7 3906.0 35540.0
Aug 8742.6 11079.2 5319.3 2951.4 2248.5 3911.1 34252.0
Sep 9574.5 7144.7 5123.6 7387.3 3736.5 2532.4 35499.0
Oct 11010.8 4953.6 11261.7 9208.3 6031.4 1175.1 43641.0
Nov 9609.5 5618.0 9262.7 6379.2 3506.9 720.7 35097.0
Dec 14881.9 6258.1 9505.7 5537.6 3896.2 1556.1 41635.5
Jan 20132.9 8301.5 11598.0 5210.0 3577.8 0.0 48820.2
Feb 22750.9 11876.6 11770.3 4782.7 19927.8 0.0 71108.3
Total 145117.4 74283.6 93326.9 67382.3 48759.5 39281.4 468151.0
Source: Information provided by GPCB to Committee, March-April, 2013
3.3.5: Observation and Recommendation of this Committee
The issue of fly ash utilization and disposal is technically manageable. Given all the technologies, plans and capabilities that the company has at its disposal, it should be able to satisfactorily mitigate the hazards. But it is clear that there has been a problem in management on the ground. The GPCB field inspection report of April 2011 shows that there was disregard for local pollution because of fugitive emissions and discrepancy in accounting for utilization. There is no follow up report or additional monitoring reports, which would show that all issues have been satisfactorily resolved. The compliance report filed by the company to regional office of MoEF, have also been non-serious about these issues. There is no report available on the compliance with the notification on utilization of fly ash.
This Committee, after assessment has also concluded that the inventory of fly ash given by the company/GPCB does not satisfactorily demonstrate proper utilisation/disposal of ash. For instance the data from April 2012 to February 2013 indicates 90 per cent utilisation (including disposal in ash dyke). The unresolved issue is where the remaining ten per cent of the fly ash and bottom ash (over 1,00,000 tonnes) is being disposed or utilised. This suggests that there would be possibility of dumping ash which would lead to air pollution and land degradation.
The EC conditions require the company to conduct regular monitoring in and around the ash pond area. However, in the compliance reports filed by the company, it is submitted that this condition is ‘not applicable’ – with the justification that there is 100 per cent utilization. But clearly, this is not the case. The company is in non-compliance with this condition. The issue
31 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
of monitoring must be taken seriously as it will build a credible system to allay the fears and problems faced by local people. The problem of fly ash and its disposal continues to agitate local people. The ToR of this Committee includes examination of “the issues related to handling of fly ash by Adani Power Limited and particularly with reference to the Notification on utilization of fly ash”.
The Committee would recommend the following:
1. GPCB should set up a robust monitoring system, which is in the public domain that tracks and reports on:
One, the quantum of fly ash generated by all the phases of the Adani thermal power plant, which will vary based on the source and quality of domestic coal: It is important to note that the quantity will vary greatly based on the source of coal that is utilized in the plant. A careful examination of the papers submitted by the company show that there are key assumptions made to estimate the fly ash quantity, which may or may not be correct. For instance, it is estimated that coal used in Phase I will have ash content of 5-8 per cent and Phase II will have ash content of four per cent, based on one coal sample imported from Indonesia. It is not clear if this measurement has been validated subsequently. In Phase III, the quantity of ash that is being generated is expected to be much higher as the plant will utilize domestic coal. The EC for Phase III is based on 70 per cent domestic and 30 per cent imported coal. The EIA document assumes that domestic coal will have 35 per cent ash content; but the source of the assumption is unknown as domestic coal has typically 45 per cent ash content.
The monthly/annual monitoring system must be designed to ensure that there is complete clarity about the source of coal utilized; its quantum and as a result the fly ash generated. This is important, as the greater use of domestic coal – particularly in conditions where market for imported coal is more hostile – will change the fly ash generation scenario manifold. Therefore, it is imperative that there must be a greater clarity on source of coal utilization to understand fly ash generation, which in turn is necessary to verify the budget for utilization. Without this, it is not possible to state, whether the company meets the compliance condition of 100 per cent utilization of fly ash.
Two, verify and audit the utilization of fly ash. While it may be difficult to check the use of fly ash for reclamation and brick making, it is certainly possible to audit the quantum of fly ash used for cement manufacturing. As per compliance reports filed by the company, little information is available that helps to check or audit the claim of 100 per cent utilization. As per the information provided by the company to the Committee in 2012, cement companies utilized 45 per cent of the fly ash.28 GPCB has provided information on the companies that use the fly ash – name and quantum. The next step would be to cross check these claims through logbook information, receipts from truckers, receipts from the cement manufacturers and to do so regularly. This will provide greater clarity about the utilization of at least half the fly ash generated.
2. The Company should submit a revised fly ash utilization plan to MoEF, which does not provide for its use in reclamation. This is because it is not possible to monitor and verify that domestic coal fly ash is not being disposed or used for reclamation in low-lying areas. In May 2010 EC, a condition was stated that fly ash generated from Phase III cannot be used for disposal or reclamation in low-lying areas. This is because it assumes correctly that this fly ash will come from Indian coal, which is known to be higher in heavy metals, including mercury. This conditions was not there in Phase I and II EC. The 2011 site inspection by GPCB noted that there was disposal of fly ash in low-lying areas.29 However, it is not clear how this practice is being checked or monitored subsequently after the Phase III operation has started. The company has submitted information to this Committee that 37 per cent is used for reclamation of low-lying areas. It is virtually impossible to imagine that the company can separate out the fly ash based on different plants. Given this situation and the need to ensure compliance, it
32 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
would be advisable for the company not to use any fly ash for disposal or reclamation, unless it can show a robust and verifiable system that can separate out the ash, based on its power plant units.
3. The concern about fugitive emissions from transport and disposal of fly ash and contamination of the groundwater near the fly ash dyke and pond must be taken seriously by the regulating agencies and public monitoring systems must be evolved to check for contamination around the ash pond in particular.
33 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.4: Earthquake/Tsunami and Project Clearance
Conditions for clearances have specified the need for the proposed project to comply with the disaster management plan as mentioned in the EIA reports (see Table 6: Conditions stipulated for Earthquake/Tsunami in Different Clearances).
Table 6: Conditions stipulated for Earthquake/Tsunami in Different Clearances
Clearance date Conditions stipulated for Earthquake/Tsunami
1. September 20, 2000: Regular drills should be conducted to check the effectiveness of the on-site Port Expansion disaster management plan.
The recommendations made in the Environment Management Plan and disaster management plan, as contained in the EIA and Risk analysis of the project shall be effectively implemented.
2. July 21, 2004: Regular drills should be conducted to check the effectiveness of the on-site Single Point Mooring disaster management plan.
The recommendations made in the Environmental Management Plan and Disaster management plan, as contained in the Environmental Impact Assessment and Risk analysis reports of the project, shall be effectively implemented.
3. January 29, 2007: GPCB 's CTE for Applicant shall have to comply with the risk assessment and disaster Phase I of TPP management plan.
4. February 5, 2007: A disaster management plan covering emergency evacuation mechanisms etc., Multipurpose Berth to deal with natural disasters should be prepared and furnished to the ministry.
5. January 12, 2009: Waterfront The recommendations of the risk assessment shall be implemented. Development
6. June 25, 2010: GPCB 's CTE for Applicant shall have to comply with the risk assessment and disaster Phase III of TPP management plan.
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF and consents by State
3.4.1: Observations on Earthquake/Tsunami by Monitoring Committees/ Courts
Kala Committee Report: Concern about the risk of a natural disaster in the area was raised in Gujarat High Court under Special Civil Application (SCA) no. 10104 of 2010. Gujarat High court in its July 2011 order constituted the J C Kala committee to look into the issue. The committee was asked to furnish its expert opinion on viability of the said project located on the beachfront, keeping in view the earthquake of severe intensity that happened in Japan.
The report30 states that Mundra port is in the highest risk zone (Seismic Zone V) of earthquake as per seismic zoning map of India. It also acknowledged that the area has suffered some big earthquakes ranging between 5.5 to 8 magnitudes. Prof. Ashwin Kumar of IIT Rorkee, member of the Kala Committee did the Tsunami hazard analysis for the Mundra port site (Lat 220 49’ 48” N and Long 690 30’ 58”). Five seismographic sources namely F3 fault, F4 fault, Kim Fault, Makaran convergent boundary and mid oceanic ridge were selected for the study. Tsunami magnitude and tsunami run-up height due to earthquakes occurring along these sources were
34 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
computed, and it was predicted that the maximum amplitude of a tsunami wave at Mundra Port generated due to various seismogenic sources located at different distances would be 1.26 meter (maximum). The study concluded that tsunami hazard at Mundra port is low. However the study admitted that it has not taken into account the shape and sub surface topography of the Gulf of Kutch, which is likely to amplify the Tsunami wave amplitude. The study noted that this needs to be estimated.
3.4.2: Examination of Issue by this Committee
The Mundra port site has experienced shaking due to moderate and major earthquakes in the past. Some of the prominent earthquakes as also pointed out in the IIT report that have occurred in the region include the Great Rann of Kutch earthquake of 1819 (Magnitude = 8.0) the Anjar earthquake of 1956 (Magnitude = 7.0), Bhuj earthquake of 2001 (Magnitude = 6.9). Several small earthquakes occur in Gulf of Kutch and one moderate earthquake (M = 5.5) occurred in the Arabian Sea in 1927 at a distance of 50 km from Mundra Port.
The Great Rann of Kutch earthquake in June 1819 took a toll of about 1534 human lives and heavy damage to the property in the epicentral area. Extensive damage was observed up to Ahmedabad in the east, Porbandar in the west, Jaisalmer in the north, Bhuj and Anjar. The earthquake was felt up to an average distance of 1280 km from the epicenter. This region suffered a devastating earthquake (M = 7.8) that triggered a Tsunami in November 1945 causing more than 4000 deaths and loss of property along the Makran coast of Pakistan, coasts of Western India, Iran and Oman. The Anjar earthquake in July 1956 was severely felt at Mundra, that contributed to considerable damage to property and loss of life in the epicentre area. The felt area of Bhuj earthquake in January 2001 extended up to Delhi, Kolkata and Chennai. Bhuj town and the Bhachau village located 60 km east of Bhuj suffered heavy damage and destruction. Many other areas of Gujarat including capital town Gandhinagar, Ahmedabad were badly hit. The earthquake took the toll of 13,805 human lives and 12,05,198 houses suffered damage of varying degrees. Due to strong shaking that lasted for a longer duration, heavy to very heavy damages was inflicted in eight districts of Gujarat, whereas the remaining districts witnessed moderate damage to civil structures.
Risk of tsunami around Mundra port due to moderate and large submarine earthquakes can be attributed to tectonic motions along the tectonic features (coastal faults), which are mapped and located close to and up to a distance of 100 km. In addition Prof Ashwin Kumar has identified three tectonic sources along which tsunamigenic earthquakes can occur and generate tsunamis.31 These are:
1. Infrequent occurrence of large earthquakes along Makran convergent boundary leading to destructive tsunami along the Makran coast of Pakistan and in the Northern Arabian Sea.
2. Under thrusting of Oman oceanic lithosphere at a shallow angle beneath the Iranian micro- plate is causing uplift and turning Makran coast in Baluchistan and Sindh provinces into a very densely faulted belt.
3. The segment of mid-Oceanic Ridge located at a distance of 1,900 km from Mundra Port – a divergent plate boundary between Africa and Indo–Australian plates. In addition, tectonic sources, submarine landslides along Makran coast and Mid-oceanic ridges can also cause tsunamis.
The report adds that in addition to above tectonic sources, submarine landslides along Makran coast and Mid-oceanic ridges can also cause tsunamis. Submarine landslides can be triggered even by small and moderate earthquakes occurring along offshore tectonic features. Historic tsunamigenic earthquakes might have occurred on the various tectonic sources as identified but in the absence of data, it is difficult to ascertain the heights of the tsunami waves.
35 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.4.3: Observation and Recommendation of this Committee
The issue of coastal safety is a matter of great concern. As established by the analysis above, tsunami and earthquakes are threats to the area owing to its geological settings. But there has been no comprehensive assessment in terms of risk/hazard analysis.
The Committee recommends that the Government should carry out an Impact Study especially in light of the Japan tsunami in 2011. Also, the disaster management plan of different project proponents of MPSEZL should be linked to the 'District Disaster Management Plan'. This will be in the interest of the vulnerable people in and around the project area to ensure human safety with early warning practices. The Committee also recommends carrying out periodic mock drills along with district administration in and around the project area.
36 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.5: Salinity Ingress and Impact on Agriculture
In all conditions of clearances it has been made clear that the proposed project should not carry out any activity, which will result in saline water ingress (see Table 7: Conditions for preventing Salinity Ingress in Different Clearances). Groundwater extraction in coastal areas can be a cause for salinity ingress therefore conditions restricting the same have also been imposed in the clearances. In fact, the conditions say that there will be no groundwater withdrawal during and after construction. The clearance conditions for different projects stipulate that the company should install piezometers at strategic places to monitor groundwater levels.
Table 7: Conditions for preventing Salinity Ingress in Different Clearances
Clearance date Condition stipulated for Salinity Ingress
1. September 20, 2000: Project proponent shall ensure that ingress of the saline water into the ground water does Port Expansion not take place as a result of the proposed project. Piezometers shall be installed for regular monitoring for this purpose at appropriate locations at the project site.
No groundwater shall be withdrawn for this project.
2. August 4, 2005: Clearance Pizeometers shall be installed at appropriate locations and ensure that groundwater is not for salt work affected by saline intrusion.
3. February 5, 2007: The proponent shall ensure that as a result of the proposed project, ingress of the saline Multipurpose Berth water into the ground water does not take place. Piezometers shall be installed for regular monitoring for this purpose at appropriate locations at the project site.
4. January 29, 2007: NOC to Applicants shall not use/withdraw ground water either during construction and/or power plant from GPCB operation phase.
5. August 13, 2007: EC for Regular monitoring of ground water quality including heavy metals shall be undertaken Phase I of TPP around ash dyke and the project area to ascertain the change, if any, in the water quality due to leaching of contaminants from ash disposal area.
6. May 29, 2008: CRZ It shall be ensured that due to the project, there is no adverse impact on the drainage Clearance for intake and of the area and recharge of groundwater. No groundwater shall be tapped in the project disposal facility for TPP area falling in the coastal regulation zone.
7. October 21, 2008: EC for Regular monitoring of ground water quality including heavy metals shall be undertaken Phase II of TPP around ash dyke and the project area to ascertain the change, if any, in the water quality due to leaching of contaminants from ash disposal area.
8. May 20, 2010: EC for No groundwater shall be extracted for use in operation of the power plant even in lean Phase III of TPP season
9. February 20, 2010: Groundwater shall be monitored on regular basis with piezometer bore wells at suitable Environment Clearance for locations in consultation with GPCB and its records shall be maintained. The monitored Common Effluent data along with interpretation shall be submitted at least once in six months. Treatment Plant
10. February 20, 2010: No groundwater shall be used and the water required during construction phase shall be Environment Clearance sourced from Gujarat Infrastructure Ltd. for Samundra Township
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF and consents by State
37 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.5.1: Observations on Salinity Ingress by monitoring committees
GPCB Inspection, April 15, 2011: The Gujarat Pollution Control Board conducted a site inspection. During the inspection, it was noted that the Company has provided an open unlined (kachcha) channel and kachcha reservoir for storage of seawater.32 The Board had received representations from surrounding villagers regarding increase of salinity in groundwater. Therefore, the Board issued directions on April 18, 2011 to the company to carry out a detailed assessment of underground water quality, including salinity ingress, in surrounding area through a reputed agency. Based on this direction, the Company commissioned the National Productivity Council (NPC) to do a study to assess salinity problems and groundwater quality.
M/s Adani Power Ltd commissioned NPC, Gandhinagar to conduct the study. A total of 36 borewell water samples were drawn from 18 locations in two seasons during 2011 and tested at M/s SGS India Pvt Ltd in Ahmedabad. It reports that except for two samples, all other samples were found to be unfit for drinking water as per IS:10500 specifications because of different reasons – from taste, to high dissolved solids to coliform. There was slight improvement in the post-monsoon season.33
3.5.2: Examination of issue by this Committee
The Committee has a specific ToR on this matter: to examine, “likely impacts on agriculture due to salinity ingress due to the creation of huge water body of sea water for Adani Power Plant at Mundra Taluka.”
In order to examine this issue in-depth and comprehensively, data is required on groundwater quality, which would provide time series information on salinity levels in the area around the water body.
3.5.2.1: Data on groundwater quality: EC requirement of groundwater monitoring by Company – Under the EC condition, the company is required to monitor groundwater levels, using piezometers, to check against salinity ingress. In addition, it is required to monitor groundwater quality, including heavy metals around the ash dyke and the project area to check against contamination because of fly ash from the thermal plant.
But data is unavailable for analysis and interpretation. As per the compliance reports submitted by the Company to MoEF’s regional office, piezometers to monitor ground water levels have not been installed. One of the latest compliance reports, simply says it will comply with this condition and report back to Regional office but no time frame is given as to by when the condition will be met. The same is the situation with the condition on monitoring of ground water quality around the ash pond area for heavy metals.
NPC final report on groundwater quality July 2012: The NPC report finds that in 80 per cent of the villages, borewell water tested pre-monsoon season, exceeded standards for total dissolved solids (TDS) – with levels going up to 3,616 mg/l in Tragadi and over 2,500 mg/l in Navinal.34 But it does not explain the location of the well or the depth. There is also no indication of the increase in trend, if any, of TDS levels in wells. The report does not specifically collect well water samples – open and borewells – from the areas around the open drain and reservoir. Furthermore, as is well known, electrical conductivity is a much better measure of salinity. This analysis was not done.
In our assessment, the NPC report provides inadequate data and analysis and therefore, does not allow for conclusive interpretation on the problem of salinity ingress. This data cannot be used to assess compliance with the condition to prevent salinity ingress in the area. GPCB, which had issued directions to the company on the assessment of water quality, based on
38 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
complaints by villagers, must reject this analysis and proceed accordingly with is investigations and actions.
State groundwater board monitoring data: The Gujarat Pollution Control Board (GPCB) provided the Committee data on electrical conductivity, TDS and chloride monitored by the state Ground Water Board in wells at Mundra and Tunda. The data for Tunda was very sporadic and hence was not used for analysis. As per the data for Mundra, five wells were monitored in May and October every year from 2001-2012. The data does not give any clear trend on parameters vital for human consumption but it does depict that none of the wells have water fit for human consumption (see Box 1: Salinity analysis based on data from Gujarat Ground Water Board).
Box 1: Salinity analysis based on data from Gujarat Ground Water Board
Total Dissolved Solids (TDS) is plotted against all individual monitoring values for May and October through 2001-12 (two season monitoring is important to capture the contamination in the pre-monsoon and post-monsoon season. (Graph 1: TDS values for Mundra May 2001-May 2012 & Graph 2: TDS values for Mundra Oct 2001-Oct 2012). As per the Indian drinking water specification (IS: 10500), the desirable limit of TDS is 500 parts per million (ppm) and the permissible limit (in the absence of an alternate source) is 2000 ppm. Beyond desirable limit, palatability of water decreases and it may cause gastrointestinal Graph 1: TDS values for Mundra May 2001-May 2012 irritation. The lowest TDS was recorded for well HLT-071 in May 2004 (360 ppm), which seems to be discrepancy since all the other figures are at least above 1000 ppm. The highest TDS recorded was for the well HLT-072 in October 2004 (11,680 ppm). Although there is no trend emerging from the data, when compared to the TDS desirable limit of 500 ppm, none of the water samples are of drinking quality. If compared to the permissible limit of 2000 ppm, then as per October Graph 2: TDS values for Mundra Oct 2001-Oct 2012 2012 data, only HLT-071 well is below the limit (1,900 ppm). Also, water from none of the wells is drinkable throughout the year.
Chloride: As per IS: 10500 drinking water standard, the desirable limit for chloride is 250 ppm while the permissible limit is 1000 ppm. Beyond the desirable limit, taste, corrosion and palatability are affected. The lowest chloride recorded is for well HLT- 071 in May 2004 (40 ppm) while the highest was for well HLT-072 in May 2010 and October 2010 (5,000 ppm). Although there is no trend emerging from the data, when compared to the chloride desirable limit of 250 ppm, none of the water samples are of drinking quality. If compared to the permissible limit of 1,000 ppm, then as per October 2012 data, only HLT-071 well is below the limit (672 ppm). Also, water from none of the wells is drinkable throughout the year.
39 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
3.5.2.2: Data on intake-outfall and water requirements: The Committee is unable to assess groundwater contamination and salinity ingress based on the available data. It therefore, decided to examine the issue of intake and outfall – the quantity of seawater that is transported inland for use and for discharge from the thermal power plant – and therefore, to understand implications of this activity on salinity ingress (see Box 2: Water requirement, discharge and capacity of channel).
Box 2: Water requirement, discharge and capacity of channel
Another issue which could affect salinity ingress is the quantum of water that will be transported for use in the thermal power plant. Though the impact will clearly be because of the deficiency in the lining of the channel and not in the quantum per se.
According to the application for submitted under EIA Notification 2006 for Phase I of the project the water requirement is 173 million litres per day (MLD), which is also in line with the data provided in the EIA prepared by Telos.1 The EC granted to Phase I of TPP (dated August 13, 2007) also notes the water use as 173 MLD. The marine EIA prepared by NIO for Phase I (June 2006)2 states that about 148 MLD of water is required for Phase I. As per the CRZ clearance granted on May 29, 2008, for intake and disposal facility for Phase I, the total water requirement for Phase I along with the desalination plant will be about 530 MLD. The NIO 2006 EIA states that the desalination plant is for potable water use of the Mundra SEZ. The capacity of the desalination plant is unclear but NIO has estimated a water requirement of 200 MLD for the same.
As per the EAC meeting (February 11-13, 2008) it was indicated by the project proponent that the plan for setting up the 80 MLD desalination plant has been dropped. It is however unclear whether this is the same desalination plant that was proposed along with Phase I of the TPP or an additional desalination plant proposed with Phase II. The EC for Phase II (dated October 21, 2008) indicates the water requirement for Phase II as 313 MLD. According to the consent given by GPCB for Phase II on June 6, 2008, the water requirement is about 319 MLD.
Water requirement for Phase III is 385 MLD as per the EIA report.3 It is also estimated that the water requirement for the Flue-gas desulfurization (FGD) and the desalination plant for this phase of the TPP will be 6,510 MLD, making the total water requirement 7,000 MLD. The EC granted for Phase III on May 20, 2010, states that the total water requirement for all three phases including FGD and desalination plants combined is 7,560 MLD.
As per the Rapid Marine Environmental Impact Assessment Report by NIO in June 2006,4 the effluent discharge from Phase I operations of the power plant will be 137 MLD. The discharge will have a temperature of 7oC above the ambient temperature, and high salinity. According to the consent given by GPCB for Phase I on January 29, 2007, the rate of effluent discharge is also 137 MLD. But as indicated in the CRZ clearance for intake and disposal facility for Phase I, the rate of effluent discharge is 396 MLD, which is much higher than that indicated in the GPCB consent and EIA. It should be noted, that the consent for use of outlet for discharge of effluent by TPP as granted by GPCB on February 19, 2011, based on capacities for Phase I and II of the power plant, specifies that the trade effluent from factory should not exceed 267 MLD. As per the EIA report5, wastewater discharge from Phase III is 476 MLD. Moreover it is estimated that 6,210 MLD will be discharged from FGD for and the desalination plant. The total water discharge is estimated to be 7,080 MLD combining all three phases.
According to NIO report, a new discharge point is required as it was recognized that the earlier location would not be able to handle the quantity of effluent following the Phase III expansion.6 The new outfall, with a capacity of 2,328 MLD, will be located at 22o 45' 17.8”N and 69o 36' 45.5”E. Therefore, the plant, which is based closed water cycle, will have to recirculate its water, the total discharge combining all three phases is 7,080 MLD. The company should prepare a comprehensive water audit, which explains the quantum and quality of discharge and the capacity of the effluent channel to carry the waste.
40 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Location of intake for thermal power plant: Salinity has been a concern for thermal power plant from the intake and outfall channels carrying a huge quantity of saline water through the land – which, if not built with impervious lining could seep into the ground. There is a lot of confusion on the different intake and outfall channels that have been proposed by the Company at different stages of the project (see Box 3: Too many channels and no clarity).
As per clearances granted, water required for the power plant would be seawater sourced through an open channel. According to the Application Form (Form I) submitted to MoEF by the company, the water source is Kotdi creek, which is mentioned as a perennial source of water. The Rapid EIA prepared for the Phase I by Telos Consultancy states that open intake is technically more suitable for the project.35 The EIA also states that cooling water for the power plant will be drawn from the sea from the mouth of Kotdi creek but it does not mention coordinates of this intake point. The DPR prepared by Fitchner also only states that the intake of seawater will be from Kotdi creek mouth.36 The NIO 2006 rapid marine EIA for Phase I states that an open channel for intake is an attractive option from techno-economic considerations.37 The NIO report 2006 provides the probable intake location from Kotdi as 22o 47' 11.7”N and 69o 33' 3.26”E.38 The same has been reiterated for Phase II of the TPP including the marine EIA by NIO, April 2008.39 The location was granted CRZ clearance on May 29, 2008.
However, the intake channel location and clearance that is being used by the company is the one given under its waterfront development project. In January 19, 2009, the MoEF issued an Addendum to its CRZ clearance for the proposed waterfront development project at Mundra. This says “the project also involves laying of intake and outfall for the thermal power plant which is located outside CRZ area.” This clearance is based on the NIO report of July 2008 prepared for the waterfront development project.
The intake channel, which has got clearance under the waterfront development project is a common facility for Adani and Tata power (CGPL). In March 2010, MoEF letter to CGPL says “It is proposed by both M/s CGPL and M/s APL to use common intake water channel for intake of seawater being developed by MPSEZL. The location of the common intake water channel is suggested by NIO.”
It is now given to understand that the common intake, suggested by NIO is part of its EIA 2008 for waterfront development.
Lining and construction conditions of intake channel: The Addendum for CRZ clearance, dated January 19, 2010 for “laying of intake and outfall” for thermal power plant does not give any details of the lining and construction of this intake. The EIA report (probably as it is for waterfront and not for quality of effluent from thermal power plant), only discusses the need for mitigating impact of effluents on final discharge into the sea. It provides for guiding rock bund of three km length on the eastern side of the effluent discharge spillway up to a natural depth of 4 m below CD. Therefore, this EIA does not investigate the problem of salinity increase because of the conveyance through the channel.
Location of outfall channel: Similar to the intake channel, the outfall channel has also undergone number of changes. Thee clearance has been sought for outfall channel in different phases.
The final outfall, similar to the intake, the outfall for the thermal power plant is based on the 2008 EIA for the waterfront development project and the Addendum clearance given by MoEF on January 19, 2009.
Lining and construction conditions of outfall channel: The EC letter for waterfront project (Addendum, January 19, 2009) only says that the project involves laying of intake and outfall system for TPP. The NIO EIA 2008 for waterfront project40 says that 97,000 m3/hr of effluent
41 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Box 3: Too many channels and no clarity
Intake: As per the EIA report for Phase III of the TPP prepared by Envirotech, seawater will be drawn through a combined intake channel developed by MPSEZL for which Adani Power Limited has signed an MoU with MPSEZL.1 The intake point is stated to be located near Kotdi creek at 22o 44' 35.9”N and 69° 32' 23.2”E as per the MoU.2 According to the Marine EIA for Phase III of the TPP prepared by NIO in 2009, it is said “the total water requirement of 1 million m3/hr is considered under the Water Front Development Project (WFDP) of MPSEZ.3 The report further states that a “combined seawater intake channel catering to the requirements of UMPP, APL, port clusters, industries and social infrastructure is proposed as part of the water infrastructure of the WFDP.”4 The UMPP being referred to here is that 4000 MW TPP of Coastal Gujarat Power Limited (CGPL).5 The report states that the location of the intake point is 22o 47' 11.7”N and 69o 33' 3.26”E”. It can be noted here that the two EIAs for Phase III provide different locations for the intake point.
According to the Marine EIA of the Water Front Development Plan (WFDP) of Mundra Port prepared by NIO in 2008, an open channel located at 22o 44' 35.9”N and 69o 32' 23.2”E is proposed for all users in the area as part of the WFDP for the intake of 1 million m3/hr of water. This again is a different intake coordinate than the one explained earlier which is being attributed to WFDP but it matches the coordinate mentioned in the Envirotech EIA report for Phase III. The channel will travel approx 7 km northwards towards the power plants and will bifurcate into two perpendicular arms terminating into concrete fore bays of the intake pump houses of the power plants. As per the EC granted to WFDP in January 2009, “seawater intake channel is planned for power plants, desalination plant and other industrial requirement.”
The proposal for a new location for the intake channel was discussed during the 83rd EAC meeting held on December 21, 2009. During the meeting, it was submitted by CGPL, that the 660 MW power plant of Adani Power Ltd. (APL) is close to CGPL. And it is proposed that both APL and CGPL will use a common intake water channel developed by MPSEZL, to save costs and minimize impacts on marine ecology.6
Table 1: Different intake locations over project cycle
Document Type Latitude/ Longitude
NIO June, 2006, Phase I TPP 22o 47' 11.7”N and 69o 33' 3.26”E
NIO 2007 22o 47' 11.7”N and 69o 33' 3.26”E
NIO April, 2008, Phase II TPP 22o 47' 11.7”N and 69o 33' 3.26”E
GPCB Consent June, 2008, Phase II TPP As per NIO recommendation
NIO July, 2008, WFDP 22o 44' 35.9”N and 69o 32' 23.2”E
EC October, 2008, Phase II TPP As per NIO recommendation
EIA report Phase III (Envirotech) 22o 44' 35.9”N and 69o 32' 23.2”E
NIO December, 2009, Phase III TPP 22o 47' 11.7”N and 69o 33' 3.26”E
Amendment to CRZ Clearance for revised location of As per NIO recommendation
Source: Analysis by Centre for Science and Environment, New Delhi based on EIA reports of different project components
Outfall: The rapid marine EIA of Phase I of TPP (June 2006), identifies the point of discharge of wastewater at 22o 45' 48.25”N and 69o 32' 3.67”E.7 The EC granted said that outfall is as per NIO recommendation. Also, the CRZ clearance granted in May 2008 for intake and outfall facility for Phase I of TPP states that the outfall be a pipeline with diffuser as per NIO recommendation. The same has been repeated for Phase II of TPP.
42 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
According to the Marine EIA for Phase III prepared by NIO in 2009,8 APL has received approval for intake point for Phase I and II at is located at 22o 45' 48.25”N and 69o 37' 03.67”E. The report further adds that a new discharge point was required as it was now recognized that the earlier location would not be able to handle the quantity of effluent following the Phase III expansion. Thus the “coolant and desalination rejects of the power plant were proposed to be shifted to MPSEZ facilities.”9 The 'approved outfall' of MPSEZ as mentioned in the EIA report is 22o 45' 17.8”N and 69o 36' 45.5”E.10 The July 2008 NIO11 marine EIA for WFDP also confirms with the same point of effluent discharge as does the Envirotech EIA of Phase III.
Table 2: Different outfall locations
Document Type Latitude/ Longitude Lining/construction
TPP Phase I
EIA NIO 2006 22o 45' 48.25”N and 69o 32' 3.67”E Pipeline with 20 port diffuser and suitable dia-pipeline
EC, August 13, 2007 No mention of outfall
GPCB Consent, 22o 45' 48.25”N and 69o 32' 3.67”E As per NIO recommendation January 29, 2007,
CRZ clearance for intake As per NIO recommendation in Pipeline as expected to have high salinity of 55 ppt as and outfall May 29, 2008 Kotdi creek against 37 ppt of intake seawater
TPP Phase II
EIA NIO 2006 Same as phase I Same as phase I
GBCB Consent, 22o 45' 48.25”N and Collected in effluent holding tank and released June 6, 2008 69o 32' 3.67”E through diffusers
EC October 21, 2008 Recommendations of NIO will be NIO recommendations implemented
TPP Phase III
EIA NIO, 2009 22o 45' 17.8”N and 69o 36' 45.5”E Changed for thermal plant because of phase III expansion and higher discharge; shifted to MPSEZ Channel of 11 km, with guiding rock bund of 3 km on eastern side of effluent discharge spillway
EC May 20, 2010 No mention of outfall To prevent salinity, necessary preventive measures such as lining of guard pond, used for treatment of intake and outfall adopted; Brine water to be discharged only after it meets average salinity of seawater
GPCB consent, No mention of outfall No mention of lining June 25, 2010
Waterfront Development
EIA NIO 2008 22o 45' 17.8”N and 69o 36'45.5”E 97,000 m3/hr effluent disposal expected; of 54 ppt; dredged channel uniform depth of 2.5 m/ top width of 19 m and bottom width of 17 m; 11 km, terminating to depth of 4 m below CD through spillway depth of 4.5m,100 m away from breakwater
EC Addendum No mention Project involves laying of intake and outfall system for TPP January 19, 2009 which is located outside CRZ area
MPSEZ
EIA NIO, 2010 22o 46' 44.04”N and 69o 45' 5.51”E Pipeline with subsurface diffuser
Source: Analysis by Centre for Science and Environment, New Delhi based on different EIA reports and clearances from MoEF and State
43 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
The Company has clarified to the Committee that its intake is common with CGPL and the coordinates are those given in the WFDP EIA prepared by NIO in July 2008 (see Figure: Final Intake and Outfall channels for the TPP). The Company further adds that its outfall is the one based on WFDP EIA of July 2008 for which it received clearance under the WFDP EC in January, 2009.
Figure: Final intake and outfall channels for the TPP
Adani power uses common intake with CGPL but uses its own outfall channel
Source: Analysis by Centre for Science and Environment, New Delhi, April 2013
with high salinity (54ppt) will be discharged. It proposes a channel of 11 km, which will go through Kotdi creed and terminate below 4 m through spillway.41
It does not specify the lining that will be provided to check against salinity contamination. It is clearly because the proposed and now constructed outfall, originally came from the Phase I and II of the thermal power plant, which was planned as a pipeline with 20-port diffuser.
While the clearance for the outfall under waterfront does not specifically provide for the type of lining, the EC condition for phase III of thermal power plant clearly mentions the need to prevent salinity. It says that necessary preventive measures, such as lining of guard pond, used for treatment of intake and outfall will be adopted. Brine water will be discharged only after it meets the average salinity of seawater (37 ppt as against 57 ppt in discharge).
The issue of lining was also discussed during the 59th EAC meeting held on November 29, 2007, while recommending CRZ clearance for the intake and outfall facility. At this meeting the project proponent was asked to provide details about the lining of the outfall channel, which is important for preventing saline intrusion in the ground water.
Strangely enough, the CGPL, located adjoining to APL has been directed to use impervious layering like geo-membrane lining to prevent contamination of groundwater.
A site visit conducted by GPCB on April 8, 2011, observed that a 7 km long kutchha (unlined) intake channel has been developed for seawater intake for cooling and other uses of the power plant.42
44 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
The Committee also noted that the channel, which was nearing completion during its field visit, was only lined using stone pitching – which is a method to stablize the sides of the channel and will not have any effect on reducing saline infiltration. It is also to be noted that all EIA reports have accepted that the outfall effluent will be substantially higher in salinity levels – 37 ppt of seawater and 55 ppt of effluent.
Soil Permeability The Company states that the intake and outfall channels have been proposed without any lining since the soil in the area is impervious. However the soil analysis done in the different EIA reports of the project and the data provided by the Company to the Committee present a different picture.
As per the soil analysis presented in Phase I TPP EIA, prepared by Telos, five different village soil samples have been analysed (including Tunda and Wandh).43 The soil testing has been done by Gujarat Institute of Desert Ecology, Bhuj in February, 2006. The soil type identified at each of the site is 'sandy loam' which is a mixture of sand, clay and silt. The soil at Tunda is said to be about 45 per cent sand, 16 per cent silt, eight percent clay and rest are coarse particles (Wandh analysis is not available). The EIA report further adds that the porosity of soil at Tunda is 80 per cent while that of soil at Wandh is 77 per cent implying highly porous soil. Permeability is directly related to porosity, which implies that higher porosity means higher permeability.44 Permeability also depends on certain other factors like grain size, etc. The relationship between grain size and permeability says that smaller the grain size, lower the permeability and vice versa.45 The EIA states that the coarse particles being referred to as soil composition are particles more than 2mm in size. Clearly the porosity and grain size conditions point towards high permeability of soil in the area. The same analysis is given in Phase II EIA report prepared by Envirotech East.46
Another soil sample testing in the same five villages has been done by the same institute in April, 2007 for Phase III EIA prepared by Telos. It also concludes that the area has a sandy loam textured soil. Porosity of soil sample at Tunda is reported to be 84 per cent and that at Wandh as 90 per cent, again implying high porosity or permeability.47 Thus from all the EIA reports of the TPP it can be inferred that the thermal power plant area has highly porous soil pointing towards high permeability.
The company has submitted various documents to the Committee on soil analysis too in March and April 2013 which have been analysed (see Table 8: Soil analysis done by Company for different projects under SEZ/WFDP). These reports pertain to different projects under the SEZ or the waterfront development and not specifically to the TPP site. Hence it is diffuclt to conclude on soil permeability using these reports.
Clearly, the project proponent is relying on different set of data for different purposes. In Committee's view, the data in the TPP EIA reports is the one to be believed since it is for TPP that the intake and outfall has been built and also Tunda and Wandh monitoring has been done which are the impact zone villages.
3.5.2.3: Pond for treatment and storage before outfall: The Company has informed the Committee that at present only the cooling water blow down and the FGD effluent is stored in their raw water reservoir. This temporary reservoir is 400m x 350 m x 14m in dimension. The FGD effluent is treated through aeration and diluted using make-up seawater. This along with the diluted cooling tower blow down is pumped back into the system. The Company also states that it does not plan to move to a once through cooling system. Some little effluent is discharged into the intake channel itself. In such a scenario, it is unclear to the Committee why is the Company making the investment in building a new unlined outfall.
45 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Table 8: Soil analysis by the Company for different projects under SEZ/WFDP
Date of Study Document Name Consultancy Study Conclusions Inference
December 20 MLD capacity K.C.T Consultancy The report looks at porosity The GIDE results for the 2007 desalination plant at Pvt. Ltd. of different soil samples same year (in April) Adani Power SEZ, ranging between 18% differ hugely with Adani Power Ltd, Village to 39%. this analysis. Tunda & Siracha, Mundra
February Proposed construction K.C.T Consultancy The report states that the These results point 2006 and upgradation of Pvt. Ltd. coefficient of permeability towards the soil being Mundra port road for the different soil not permeable which project samples varies between differ from the GIDE 0.2-0.5x10-6 cm/sec. results for monitoring around the TPP in February 2006.
July Proposed 20 lacs litre K.C.T Consultancy The report finds that Again the GIDE analysis 2006 capacity RCC water tank Pvt. Ltd. permeability of two soil in 2006 (in February) & Pump house for place samples is 0.58 – 0.62x10-6 differs from this 1B at SEZ Mundra cm/sec. The porosity of the analysis. samples is found to vary between 23-45%.
Source: Information submitted by the company to the Committee, April 2013
3.5.3 Observation and Recommendation of this Committee
The careful review of all environmental clearance conditions show that the Company was sufficiently warned about the need to take all precautions to prevent salinity intrusion in the groundwater. However, it is apparent that the company has failed to fulfill this condition.
The intake channel, the outfall channel and the raw water reservoir/guard pond are operational but without any lining/protection to protect against contamination of groundwater. This is a clear violation of the environmental clearance condition.
The examination by the Committee shows that the soil in the area is permeable and without safeguards it will lead to contamination.
The Committee is unable to establish if contamination has already occurred in the area, because of lack of data.
However, this lack of data is also because the company has not monitored groundwater levels. This is a clear violation and shows non-compliance with the environmental clearance conditions. The EC conditions stipulate that the company must monitor groundwater regularly for salinity and pollution. But it has failed to do so.
The other important conclusion based on the Committee’s analysis is that there is clear mismatch between the discharge capacity of the outfall and the total quantum of wastewater that will be generated. The capacity of the outfall is 2,328 MLD, whereas the total wastewater discharge is 7,080 MLD. The question is what will happen to the huge quantity of wastewater, which cannot be discharged through the outfall. This can only be handled through water use systems, based on closed cycle cooling tower, which the Company is currently practicing. This completely rules out the use of one-through cooling system in the thermal power plant.
46 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
The Committee would recommend the following:
1. The intake and outfall channel must be reconstructed/repaired so that it has impervious lining at the bottom and sides.
2. The raw water reservoir/guard pond must also be reconstructed/repaired so that it has impervious lining at the bottom and side.
3. The Company should install network of piezometers with coordinates in the project area for monitoring of groundwater quality and water levels in all the seasons. These reports should be put in public domain, including its periodical submissions to GPCB and RO, MoEF, Bhopal.
4. An independent study should be undertaken every five years to study saline water intrusion and to suggest remedial action.
5. The Company should continue with closed cycle cooling system and recycling of FGD wastewater so as to reduce discharge and remain within the capacity of the outfall channel.
47 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
4. Compliance with Environment and Forest Conditions
The Committee has the following ToR to examine in this regard:
(i) Whether construction of Mundra port, roads, railway, was taken up prior to grant of Forest/ Environmental Clearances. (ii) The development of port with respect to the approved components. (iii) Compliance to the conditions of the EC and CRZ clearance granted for the port development. (iv) The development of the power plant with respect to the approved components. (v) Compliance to the conditions of EC granted for the power plant.
The previous section (3) has already examined development and compliance with the critical environmental components of waterfront project and TPP like mangrove destruction, blockage of creeks, fly ash disposal and salinity because of seawater intake and outfall channels.
This section examines the compliance reports with approved development, and issues in procedures for clearance.
4.1: Development and Compliance for Port, Roads (Waterfront Development)
Waterfront development project received EC on January 12, 2009. It comprises of North port, South port, East port and West port and associated activities.
Regional office MoEF has made two compliance reports available to the Committee on the waterfront development project – one in June 30, 2011 and another in July 31, 2012. The reports merely state that they are complying with conditions like ‘no mangrove should be destroyed’ and ‘there shall be no filling up of the creeks’. The reports also state that they are carrying out regular marine biology monitoring, but the annexure is not available with the Committee to carry out any analysis. It is the same case with the condition on ‘shore line changes to be monitored by the company every six months and submit the report to MoEF regional office’. The reports state that the same is being complied with, but the annexure is not available for the Committee to analyse the issue. The reports state that the environmental clearance condition of ‘movement of fishermen vessel of the local communities are not interfered with’ is being complied with.
MoEF granted in-principle forest clearance for 1,840 ha and 168.4 ha to Adani Chemicals Limited in May 2004. In February 2009, in-principle clearance for the same land was granted to MPSEZL and in September 2009 final clearance was granted.
Naran Gadhavi of Kheti Viask Trust has submitted an undated and unstamped letter to the Committee. This letter (in Gujarati), from Deputy Forest Conservator, Forest Department, East Kutch’, is addressed to the Collector of Kutch.48 The letter states that of the 2,598 ha of land allocated to Adani Chemicals for salt production, 2,159 ha is mangrove forest and mentions that prior permission of the central government is needed for such allocation of land involving mangrove forest. However, since the letter does not bear any official stamp/signatures/date, it is difficult to verify the same.
48 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
4.2: Development and Compliance for Thermal Power Plant
4.2.1 Examination of Compliance with Public Hearing Process
The Committee has received representations that the necessary procedure of holding public hearing was not complied with. An examination of the issue shows the following:
Public hearing for Phase I of the TPP was held in October 2006. The application form (FORM 1) submitted to MoEF by the company states that the plant is not in any notified industrial estate/area.
In May 2007, the Ministry of Commerce and Industry notified the area as a power SEZ of Adani Power Limited (APL). Phase II of thermal power plant (TPP) was exempt from a pubic hearing on the grounds that it was part of a notified power SEZ. According to Section 7 of the EIA Notification, 2006, “projects or activities located within industrial estates or parks approved by the concerned authorities, and which are not disallowed in any approvals” do not require to hold a public hearing.
As per the EIA Notification 2006, any SEZ/industrial estate where “at least one industry in the proposed industrial estate falls under the Category A, entire industrial area shall be treated as Category A, irrespective of the area.” Thus any SEZ with even one category ‘A’ industry will have to hold a public hearing and go through the EC process as a category ‘A’ project. In this case, the TPP being a category ‘A’ industry, the SEZ needed to go through public hearing and appraisal for EC.
The Power SEZ was notified before the project was placed under EAC for consideration. Therefore EAC’s decision to exempt Phase II of TPP from public hearing is valid, provided that the SEZ had all the necessary approvals including EC, which it did not.
For Phase III public hearing was held on March 12, 2010. On March 19, 2010, MoEF noted that public hearing has to be held because “environmental clearance for SEZ wherein the project is to be located has not been accorded and therefore informed the project proponent that either they shall go for public hearing separately for expansion of power plant or EC for the SEZ shall be obtained before their project is processed for approval of EC.” Thus in light of EIA notification 2006, the EAC recognized that since the multi-product SEZ did not have EC, it was important for the company to carry out the public hearing or wait till the SEZ is granted a clearance.
This approach should have been taken while granting EC to Phase II of the TPP and the company should have been asked to hold the public hearing, because, the Power SEZ also did not have EC.
As per this examination, the MoEF decision to exempt the phase II expansion of the thermal power plant was not valid. The public hearing was a necessary part of the compliance to procedure, unless the plant was located in an SEZ with environmental clearance.
4.2.2. Air Pollution Control – Compliance
In most of the conditions for clearances it has been made clear that proposed project should curb air pollution (see Table 9: Conditions Stipulated for Air Pollution Control in Different Clearances).
4.2.2.2 Examination of the Issue by the Committee: The Committee has analyzed the six- monthly compliance reports of the TPP submitted to the regional office of MoEF at Bhopal. Phase I of TPP of Adani received EC on August 13, 2007. Five compliance reports have been
49 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Table 9: Conditions Stipulated for Air Pollution Control
Clearance date Conditions stipulated for Air Pollution Control
1. January 29, 2007: Flue gas emission from the common stack of 275 m height attached to the boiler Consent to Establish 1 & 2 shall confirm to the standards. Phase I TPP Following air pollution control system shall be installed for control of flue gas emissions, process emissions and fugitive emissions - ESP, Bag house at coal handling sites, water sprinkling over coal yard. All steps shall be taken for control of fugitive emissions/dusting due to handling of coal; fly ash etc. and ambient air quality shall conform to standards.
Stack monitoring facilities like porthole, platform/ladder etc., shall be provided with stacks/vents chimney in order to facilitate sampling of gases.
2. August 13, 2007: A bi-flue stack of 220 m height with exit velocity of 22m/s shall be provided with continuous Phase 1 TPP EC online monitoring system.
High efficiency ESPs having efficiency of 99.9% shall be installed so as to ensure that particulate emissions do not exceed 100 mg/Nm3.
3. June 6, 2008: Four boilers shall be provided with 275 m high common twin-flue concrete chimney Consent for Phase II TPP The standards of SO2 and NOX emission for coal/lignite based thermal power plants are under development and therefore norms once finalized/declared/notified in that respect or otherwise will automatically be applicable to this project.
Following air pollution control system shall be installed for control of flue gas emissions, process emissions and fugitive emissions/dusting due to handling of coal, fly ash etc. and ambient air quality shall conform to the following standards - ESP, low NOx burners, bag house at coal handling sites/crusher house, water sprinkling over coal yards and fly ash storage areas, pucca roads within industrial premises, wind breaking walls within the premises, covered conveyors, covered transportation, etc.
4. October 21, 2008: Two bi flue stacks of 275 m height each for the four boilers shall be provided with continuous Phase II TPP EC online monitoring equipments for SOx and NOx and Particulate.
High efficiency ESPs shall be installed.
5. May 20, 2010: High efficiency ESPs shall be installed. Phase III TPP EC Adequate dust suppression system such as cyclones/bag filters and water spray system in dusty areas such as in coal handling and ash handling points and other vulnerable dusty areas.
6. June 25, 2010: The flue gas emission through stack attached to kiln/boiler/furnace/heater shall conform Consent to Establish to the following standards. Phase III TPP The crusher house for coal shall be provided with dust control as APC equipment. Bag filters shall be provided for bunkers.
There shall be no process gas emission from your industrial plant.
To control and manage the air pollution problem, dust extraction system shall be provided with stacks/vents chimney in order to facilitate sampling of gases.
Stack monitoring facilities like porthole, platform/ladder etc., shall be provided with stacks/ vents chimney in order to facilitate sampling of gases.
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF and consents by State
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made available to the Committee for Phase I (see Table 10: Compliance Reports of Adani Thermal Power Plant). For Phase II, four compliance reports have been made available while only two compliance reports are available for Phase III with the Committee.
Table 10: Compliance Reports of Adani Thermal Power Plant
TPP Compliance Report Submission Date Monitoring Period
Phase I October 7, 2008 Not available
December 30, 2010 April 2010 to September 2010
June 29, 2011 October 2010 to March 2011
December 19, 2011 April 2011 to September 2011
June 19, 2012 October 2011 to March 2012
Phase II June 30, 2010 October 2009 to March 2010
June 29, 2011 October 2010 to March 2011
December 19, 2011 April 2011 to September 2011
June 19, 2012 October 2011 to March 2012
Phase III December 30, 2010 April 2010 to September 2010
December 19, 2011 April 2011 to September 2011
Source: Compliance reports provided by Regional Office MoEF, Bhopal to the Committee, March-April 2013
All compliance reports of Phase I state that the company has air pollution control devices in places like Electrostatic Precipitator (ESP), flue stacks of 275 m, online flue gas analyzers for determining Suspended Particulate Matter (SPM), sulphur oxides (SOx) and nitrogen oxides 49 (NOx). The company has provided photographs of the flue stack and ESPs installed. The reports mention annexures that record the air quality parameters through the online system but these are not available with the Committee. For fugitive emissions, the reports state that regular water sprinkling is being carried out at all strategic locations within the plant. The same is the case with Phases II and III.
The reports do not say anything on other important conditions like covering of conveyors, use of low-NOx burners and covered transportation.
On April 18, 2011, GPCB issued a notice to the TPP for fugitive emissions. GPCB officials observed fugitive emission due to movement of fly ash loaded dumpers and other heavy vehicles.50
Even though the company submits that it has adequate pollution control equipments in place, their operation is an aspect that cannot be verified/commented upon by the Committee. It will prove to be a good practice to maintain separate electricity meters for the ESPs and the electricity consumption should be monitored regularly to ensure that this equipment is being operated. There needs to be a verification system put it place to ensure that air quality monitoring is done regularly by the Company and appropriate measures are taken to avoid stack and fugitive emissions. Displaying the monitoring data on the company’s website will enhance transparency.
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4.2.4 Observation and Recommendation of this Committee
It is clear that the company has been less than serious about reporting on compliance with the conditions set at the time of clearance. In many cases non-compliance with reporting conditions have been observed.
The reports, which are a critical way to ensure that attention is being given to the remediation measures, are at best perfunctory and non-committal. Strict and regular adherence with these conditions, and regular and transparent monitoring would have obviated the need for site visit by this Committee and many others who have visited the project site. It would have also increased public confidence on the issue of compliance, i.e., whether conditions are being met or not.
For instance, it is an EC condition to monitor the effluent discharge temperature to ensure that it does not exceed 7oC. It is stated that the inlet and outlet temperature should be measured daily and the difference should be within the stipulated limits. Temperature records enclosed as an annexure with the compliance report are not available. Fishermen in the area allege that the hot water released into the sea is affecting their small fish catch. Clearly, open and transparent monitoring would help to allay such concerns.
The system of monitoring and its scrutiny must be greatly strengthened. The Committee would recommend that the system must be designed so that all monitoring data is publicly available.
Continuous ambient air quality monitoring stations in the nearby villages should be set up as per the maximum GLC and proper modeling of emissions. The periodical reports should be put in public domain.
52 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
5. HTL Line Demarcation
5.1. Possible HTL Violations in Construction of Samundra Township and Sterling Hospital
December 6-7, 2010, based on a representation made by Bharat Patel, Machimar Adhikar Sangharsh Sangathan (MASS), MoEF team, led by its official, A Senthil Vel visited the area. The team in its report noted that Samundra township did not have the required CRZ clearance while Sterling hospital has been constructed within 20 meters of the creek violating the CRZ notification.
December 15, 2010, MoEF issued a show cause notice51 under Section 5 of the Environment Protection Act 1986 to MPSEZL. It also asked GCZMA to submit a report on Sterling hospital and Samundra township within four weeks, and to have a revised CRZ map prepared for the site with permissible activities super imposed.
January 6-7, 2011, GCZMA team visited the site and recorded in their report52 that Samundra township is located at about 100-110 m from existing bank of Bhukhi river and Sterling hospital is located at a distance of 100 m. The coordinates of locations taken by the GCZMA team during the site visit are not available in the report. The report also records that the CRZ map demarcating HTL/LTL was under preparation by CESS, and once received lat-long taken by the team will be superimposed on the map.
January 14, 2011, MPSEZL in a letter to MoEF clarified that Samundra is located keeping the required 100 meters distance from the banks of the river. The company added that the township is not located on level raised land but on erstwhile salt works which was not functional.53
February 23, 2011, Subsequent to hearing the company on February 15, MoEF wrote to GCZMA asking the CRZ map demarcating HTL and LTL from an authorized agency based on which approval was sought for various components including port, township, hospital, aerodrome, etc. It was also asked to submit a revised CRZ map for the site to show permissible structures and those that would need to be dismantled/removed. MoEF asked the company to not carry out any further construction/development at the site.54
March 28, 2011, MPSEZ in a letter to MoEF informed that CESS map is under preparation and will take at least two months to be finalized.55
April 29, 2011, The 12th meeting of GCZMA discussed the show cause notice, which directed the Authority to submit a report within four weeks with regards the CRZ violation in construction of Samundra and Sterling.56 The minutes state that the maps were under preparation by CESS, an agency retained by MPSEZL. For the verification of the exact distances of Sterling hospital and Samundra township “it was necessary as per CRZ notification to identify the same through CRZ maps, prepared by any of the agencies, authorized by MoEF.”57
July 27, 2011, GCZMA submits documents to MoEF on the show cause notice for violation of the provisions of CRZ 1991 by M/s Mundra.58 The documents include, “a set of the CRZ maps demarcating HTL and LTL from an authorized agency namely CESS, on which approvals were sought for various components of the project and approved by MoEF. The letter also submits, “a CRZ map indicating the location of the Sterling Hospital and Samundra township with respect to river Bhukhi done by CESS.”59
53 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
5.1.1: Examination of Issue by this Committee
There are two reports, which demarcate the CRZ area in the vicinity of Samundra township and Sterling hospital.
NIO 2005: NIO during a field visit in 2005 (report dated 2007)60 carried out the HTL/LTL demarcation and CRZ map preparation for two sites – SITE I: bounded by Mundra port on the west and Mundra Bandar on the east, Indian Oil Corporation (IOC) oil tanking facility along Mundra new port (south of proposed North port site, Lat 22o 46’ 30”, Long 69o 42’ 35.11”) and SITE II: bounded by branches of Kotdi creek on the east and west, villages Tunda and Siracha on the north and water front of Gulf of Kutch on the south (Lat 22o 48’6.8”, Long 69o 31’ 56.64”) (see Figure 13: HTL demarcation sites of NIO 2005 field survey). The CRZ maps are prepared in 1:5000 and 1:25000 scales. The report states that as per the CRZ notification, using draft MoEF guidelines, HTL was demarcated by physical survey done in August 2005.
Figure 13: HTL demarcation sites of NIO 2005 field survey
HTL demarcation done by NIO only for these two sites for the Company in 2005
Source: Analysis by Centre for Science and Environment, New Delhi based on NIO 2007 report submitted to the Committee
A tidal barrier earthen bund, apparently used for salt works, is said to support the present day HTL and was considered for demarcation. No analysis about who built the bund, whether permissible or not and its impact on original HTL has been done in the report. In its response to the Committee, NIO justifies that the earthen bunds were already existing at the times and sites of the survey. “We do not know who had built the bund. These were considered as HTL. Due to the lack of data prior to the construction of the bunds, an exact analysis of their impact could not be carried out.”61 In the view of the Committee, clearly, these issues require greater clarity as agencies demarcating HTL/LTL do not have common guidelines to ensure that human interventions made subsequent to February 1991, are understood, recorded and taken into account in policy.
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The report states that prior to port development, the site was covered with extensive saltpans, salt marsh, mangrove swamps and tidal flat system.62 At Site I, “the development is said to be abutting the vast mangrove swamp and some of the salt waste wetland is said to be elevated by dredge fill activities.” It is stated that major portion of the HTL is abutting the earthen bund separating the salt wasteland from the tidal flat. The report acknowledges that modification of northern part of site I has changed the topography of the area and influenced the dynamics of water movement.
The 2007 NIO report states that Site II is surrounded by wetland, salt waste and settlements. Tunda waterfront is a virgin area falling within the rural area at Site II. The development site is located along the sand dunes and forestland.63 At this site, the waterfront side of the mudflat is “enclosed by earthen bund on east and west sides and by reserve forest and vegetated sand dunes on the south”. The earthen bund constructed as a barrier between the salt wasteland and water body was “accepted as the present day high water line”64 and thus accepted as present day HTL. Again there is no discussion on who has built the bund and how it can be taken to mark the HTL.
The report states that at both the sites, “drainage from tidal creeks was passing through the proposed area.”65
Interestingly, the map at 1:5000 shows a setback line marked with respect to the earthen bund. This setback line turns towards the proposed TPP site and abruptly ends into its boundary (see Figure 14: Adani Thermal Power Plant shown to be outside CRZ in NIO Report). In the report, the TPP is not mentioned. In its response to the Committee,66 NIO says they have not stated in the report that the TPP is outside the CRZ area. “The person who led the project has retired from service, so the exact reason of why the setback line ends abruptly at the thermal plant
Figure 14: Adani Thermal Power Plant shown to be outside CRZ in NIO Report
The setback line turns towards the power plant site and abruptly ends in its boundary as per NIO 2005 survey
Source: NIO, January 2007, Demarcation of HTL, LTL and Delineation of CRZ Boundary at Mundra and Tunda, Gulf of Kuchchh, Gujarat
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boundary could not be ascertained. However, we think it may be because the exact location of the power plant was not known at the time of the survey.” Once again, this shows the poor application of scientific procedures for assessment of HTL and how the lines marked cannot be verified.
CESS 2008 and 2011: The Thiruvananthapuram based Centre for Earth Science Studies did two separate reports for the Adani project at Mundra. Report 1, done between April-September 2008 was for area extending from Mundra Bandar (old port) to Chokhand Mahadev.67 Report 2, for which the field visit was done during February-April 2011, was for the area extending from Mundra Bandar to Kotdi creek.68 CESS also studied the CRZ of Bhukhi river and its banks in this report, at the request of M/s Adani Port.
Report 1: The site for Report 1 stretches from near south of proposed North port site approximately till the end of the SEZ boundary (see Figure 15: HTL demarcation sites as per CESS 2008 Report). The report states that coastal zone of Mundra consists of tidal flats, saltpans and mangroves in general. In operational saltpans, the reach of tidewater is up to the landward boundary of the saltpans.69 This would imply that once the bund is removed, which should have been the case once salt work stopped operation; the HTL would have shifted. It would have moved further into land without the barrier.
The report further states that most of the saltpans east of Mundra Bandar are unused/abandoned “as per the information made available by APSEZL.” Many of the saltpans in the area, which are now abandoned, have large bunds to limit the incursion of seawater. These bunds have recently been strengthened “so that the landward flow of tide water is limited at the bunds”70, states the report. Essentially these bunds have been used to demarcate the HTL by stating that “the HTL is along these bunds”. Figure 15: HTL demarcation sites as per CESS 2008 Report
The 2008 CESS HTL demarcation was from south of the proposed North port site till near Bhadreshwar
Source: Analysis by Centre for Science and Environment, New Delhi based on CESS, 2008, Demarcation of HTL and LTL for the Proposed Port & Ancillary Infrastructure Development at Mundra in Gulf of Kachchh, Gujarat - Report 1
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In its response to the Committee, CESS’s justification is that “the earthen bund was accepted as the HTL since it was large enough to accommodate the tidal range there and it prevented tidal incursion further landward.”71 The line of the earthen bund is taken as the HTL since the bund is a distinct morphological signature for tidal limit. CESS acknowledges that no analysis was made to find out when the bund was constructed. CESS states that with the construction of bunds the original HTL is shifted towards the line of bunds and has moved towards the shore and in the absence of the bund, the HTL would have been along the landward boundary of the tidal flat/intertidal zone for which morphological signatures exist.
The question of the human-made bund modifying the HTL needs to be resolved as it has major implications for policy on CRZ demarcation in the country. It can be argued that the HTL should have been demarcated along the landward boundary of the salt work, as a new and different project was now being proposed.
Report 2: The sites for Report 2 prepared by CESS for the Company is for the area near West port to Baradi Mata creek (see Figure 16: HTL demarcation sites as per CESS Report 2011). It also included the development sites on the banks of Bhukhi river. For this report, field investigations were done during February-April 2011. Cadastral maps of 1:8000 pertaining to the project site were used as base maps.72 The coordinates given for Bhukhi in this report are a matter of dispute (see Box 4: Where is Bhukhi?).
In the case of Bhukhi, the report states, “mangroves (CRZ 1A) are abundant in the intertidal zone of the river.” CESS has marked a 50 m buffer zone around the mangrove area; and a 100 m CRZ landward of HTL along the banks of Bhukhi. On this the “layout of buildings as provided by Adani Ports & SEZ Limited has been superimposed on the CRZ map.”73
Figure 16: HTL demarcation sites as per CESS Report 2011
One of the HTL demarcation sites was the waterfront development project from West port to Baradi Mata creek
Source: Analysis by Centre for Science and Environment, New Delhi based on CESS, 2011, Demarcation of HTL and LTL for the Proposed Port & Ancillary Infrastructure Development at Mundra in Gulf of Kachchh, Gujarat – Phase 2
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Box 4: Where is Bhukhi?
CESS Report 2 pertains to study area1: Lat 22o 49’ 16”, Long 69o 40’ 10” and Lat 22o 49’ 37”, Long 69o 32’ 55”. Also the development sites on the banks of Bhukhi river are mentioned to be located at Lat 22o 49’ 27”, Long 69o 43’ 29” and Lat 22o 47’ 19”, Long 69o 40’ 10” and Lat 22o 47’ 14”, Long 69o 42’ 16” and Lat 22o 44’ 36”, Long 69o 40’ 00” (see Figure: Confusion over River Bhukhi's location).
Interestingly, when the coordinates given as the location of “development sites on the banks of River Bhukhi”2 are mapped, it is found that these are not in the vicinity of the river – in fact, in some cases, not even close to the river.
The Committee wrote to CESS on March 22, 2013, asking for clarification on the basis developments considered in the report were considered to be on the bank of the river Bhukhi3. It also asked for coordinates. In its response, dated March 26, 2013, CESS says that the developments were considered on the bank of Bhukhi, “as per the boundaries given by the company the site for which they requested CESS to prepare the CRZ map lies on either side of Bhukhi River4.” In this reply, CESS provided the following coordinates5, “the site extends from SW of Bhukhi (220 47’ 14” N; 690 42' 16”E: about 2 km SW of Bhukhi) to NE of Bhukhi (220 49’ 27” N; 690 43’ 29”E: about 2.8 km NE of Bhuki). Coordinates of one location (almost middle) in Bhukhi is 220 47’ 58” N; 690 43’ 08”E.”
The coordinate for the Bhukhi (middle of river) given now by CESS is not in the report of 2011, titled, ‘Delineation of HTL and LTL for the proposed port and ancillary infrastructure development at Mundra in Gulf of Kutch, Gujarat, Phase 2’.
The Committee is finding it difficult to reconcile these variances and to understand how CESS could have missed out on the key coordinate in its report. It is also not clear why concerned authorities never detected these inaccuracies. It would be prudent for CESS to improve its procedures in the light of this finding and for MoEF to review the working of the authorized agencies.
Figure: Confusion over River Bhukhi's location
Source: Analysis by Centre for Science and Environment, New Delhi based on CESS, 2011, Demarcation of HTL and LTL for the Proposed Port & Ancillary Infrastructure Development at Mundra in Gulf of Kachchh, Gujarat – Phase 2
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In its response, dated March 26 2013, CESS has replied, “normally it is not the mandate of CESS to superimpose the layout and this was done only as requested by project proponents. CESS did not verify whether the company has constructed as per the layout given since it is not our mandate. There was no reason for CESS to disbelieve the layout of buildings provided by M/s Adani.”74 (see Figure 17: Location of Sterling and Samundra as per CESS Report 2011).
Figure 17: Location of Sterling and Samundra as per CESS Report 2011
CESS used the layout of Samundra and Sterling provided by the Company and marked its location outside CRZ
Source: CESS, 2011, Demarcation of HTL and LTL for the Proposed Port & Ancillary Infrastructure Development at Mundra in Gulf of Kachchh, Gujarat – Phase 2 5.1.2: Observation and Recommendation of this Committee
The Committee is finding it difficult to reconcile the available reports to ascertain if the Sterling hospital and Samundra township have been constructed in violation of the CRZ. The coordinates taken by GCZMA inspection committee are not available on record for it to verify the location taken on this visit. The CESS report uses layout as provided by the company, which shows the structure to be outside CRZ. But using layout provided by the company cannot be used to establish the veracity of the exact location of the structures particularly in this instance of show cause notice.
Given this situation, the Committee would recommend that MoEF should urgently take up this matter with GCZMA and ask for review and reassessment of the matter. This assessment should be based on fresh collection of coordinates, through a joint team. GCZMA should be directed to take necessary actions based on this visit. The map should be available in the public domain so that it can be verified and the matter closed satisfactorily.
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5.2 Possible HTL/LTL Distortion in Project Area/HTL of approved CZMP
HTL/LTL demarcation for different parts of the project has been done over a period of time. Company’s justification is that the project was conceived in various stages and hence demarcation has also been done accordingly. Essentially what is present is a grid of different HTLs marked in different project areas on different scales and by different organizations (see Table 11: Variations in Demarcation of HTL/LTL).
Table 11: Variations in Demarcation of HTL/LTL
Organisation Year for field Scale Area Coordinates survey/visit
NIO 1999 1:12500 Navinal No coordinates available
NIO 2005 1:25000 & 1:5000 South of north port Lat 22o 46’ 30”, Long 69o 42’ 35.11”
Near TPP Lat 22o 48’6.8”, Long 69o 31’ 56.64”
CESS 2008 1:8000 and 1:5000 IOCL to Bhadreshwar Lat 22o 45’ 59”, Long 69o 42’ 14” till Lat 22o 53’ 53”, Long 69o 56’ 49”
CESS 2011 1:8000 and 1:5000 Bhukhi River Lat 22o 49’ 27”, Long 69o 43’ 29” and Lat 22o 47’ 19”, Long 69o 40’ 10” and Lat 22o 47’ 14”, Long 69o 42’ 16” and Lat 22o 44’ 36”, Long 69o 40’ 00”
Mundra Bandar to Lat 22o 49’ 16”, Long 69o 40’ 10” and Kotdi creek Lat 22o 49’ 37”, Long 69o 32’ 55”
Source: Compiled by Centre for Science and Environment, New Delhi from different HTL demarcation reports submitted to the Committee by NIO and CESS, March 2013
5.2.1: Examination of the Issue by this Committee
There are key issues that needs to be understood, before arriving at a conclusion about the HTL/LTL line demarcation and its possible distortion or violation.
1. Why have different scales being used to demarcate the HTL/LTL? 2. What is the implication of different scales on drawing a uniform HTL/LTL in the entire project area? 3. What is the implication of the current methodology of using cadastral level mapping on the HTL/LTL demarcated in 1991?
A. Implication of different scales: In 1998, MoEF issued guidelines on the methodology for demarcation of HTL/LTL. The guidelines specify that base maps of 1:25000 will be acquired from the Survey of India. The topography on the map will be updated using latest satellite imageries/aerial photographs. The High Water Level and Low Water Level marked on the Survey of India maps will be transferred to the Coastal Zone Management (CZM) maps.
In addition, local CZM maps will be prepared to facilitate the implementation of CZM plans. In this case, 1:4000 will be used for the base map. These maps are revenue maps with cadastral level data. The HTL/LTL will be demarcated based on detailed physical verification using coastal geomorphological signatures and features. It also says that the classification (CRZ I/II/III) will be transferred to local level CZM maps from the base map (at 1:25000 scale).
However, in this case, 1:4000 maps have not been used or prepared. Even though the first exercise of HTL demarcation by NIO was carried out in 1999 for Adani, the resulting map was of 1:12500 scale, all subsequent maps prepared by MoEF authorized agencies and accepted by the
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government have not been at 1:4000, not conforming to the guidelines issued by MoEF. When asked specifically about these issues, the agencies responded to the Committee as follows:
NIO: “the CRZ map and report of Mundra and Tunda were submitted in the year 2007 and the scale of the map was 1:5000 and 1:25000. A map in the scale of 1:5000 was prepared in order to have even multiplicity (easy to multiply) to obtain 1:25000 scale. CSIR-NIO has not submitted the map in scale of 1:3960 as it was considered by the leader of the Project as an odd scale at that time.”75
CESS: “MoEF has directed to make local level CRZ maps in cadastral maps in 1:3960 scale. This has 2 components: the map to have cadastral information (i.e. survey plots) and the scale of the base map to be 1:3960 which is the true scale of cadastral maps which are surveyed and prepared during British times. (Present day resurvey maps are of different scale: mostly in 1:5000 scale). The Adani group wanted the CRZ maps in 1:8000. Hence the maps were converted from 1:4000 to 1:8000 and given to Adani group. The field information was collected in 1:4000 or larger scales and the CRZ maps were also prepared in 1:4000 scale. Maps prepared in larger scales (1:4000) would not lose the accuracy when converted to smaller scales (1:8000). The CRZ maps provided have the required cadastral information.”76 However, CESS has made available to the Committee maps at 1:5000.
B. Implications on uniform HTL/LTL accuracy: The implication of using different scales at different time and different methodologies is that it is difficult to ascertain if the HTL/LTL has been drawn uniformly and if there has been any distortion in this process.
This was also found when the Committee examined the issue of the map, which has HTL/LTL indicated for the entire project area, done by different agencies at different times. As the map has been authenticated by NIO scientists, the Committee wrote asking for clarification on the methodology used by NIO to reproduce and combine the different scales on which HTL/LTL was marked. The NIO director, in his reply has explained that the different maps were merged into a single map using AUTOCAD by APSEZL and not by NIO. The company had brought the original maps to the regional office of NIO in Mumbai for authentication. This was done by the NIO scientist-in-charge of the regional office by selecting random points from the authenticated maps and verifying these on the AUTOCAD map.77
The question before the Committee is how accurate this 'combined' map is, considering the fact that the entire CRZ zoning and proposed developments under the project depend on this map. The process of combining maps prepared at different scales will not be scientifically accurate. This once again speaks of the complexity in this matter, and clearly shows the urgency to review and revamp systems of CRZ regulation and demarcation.
C. Implications on 1991 line/original HTL: How does the HTL/LTL correspond with HTL/LTL of 1991? Can it even be compared? These are the questions, which confronted the Committee.
Coastal Regulation Zone Notification 1991 imposes restrictions from the date of the notification on activities that are permitted based on the HTL/LTL. This implies that HTL/LTL had been demarcated across the country. In 1998, MoEF issued a notification saying that the HTL would be demarcated uniformly in all parts of the country by the demarcating authority or authorities authorized by the Central government as per the guidelines.78 The guidelines specify that HTL/LTL will be done at 1:25000 and local CZM maps at 1:4000.
According to information given to the Committee, MoEF did commission the Space Application Centre (SAC) based in Ahmedabad in the mid-1990s and then again in mid-2000 to undertake the exercise of preparing a uniform HTL/LTL for the country. But these maps, prepared at 1:25000 are only used for broad policy guidance.
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Under the 1991 CRZ notification, there is a provision for states to prepare coastal zone management plans, which will detail out the areas, governed by different categories of CRZ – I, II, III, which in turn require HTL/LTL demarcation. However, these plans were not prepared. In April 1996, the Supreme Court ordered all states to complete plans within two months, that is by June 20, and the Central government was directed to finalise and approve the plans within five months of the order with or without modification.
The confusion arises because of the question of ‘approval’ of the plan and the map. In September 1996, MoEF wrote to all states, including Gujarat, giving conditional approval to the coastal zone management plan (CZMP). Its letter says that the states, which have prepared maps on 1:25000 through satellite imagery for the purpose of delineating the HTL should submit these maps to the chief hydrographer for the purpose of demarcation.
However, it is unclear, how this map, prepared by SAC in 2000 is being used for policy and particularly for project level demarcation. The Gujarat government in its correspondence with MoEF has said it is unable to make the map available publicly, because of the objections from the Ministry of Defence.
In the meantime, it became an accepted practice that project proponents, which required CRZ clearance, would go to any of the authorized agencies and pay to get the 1:4000 map prepared. This would be submitted at the time of clearance. The 2011 CRZ revision has recognized this practice and made it part of the clearance procedures. In the notification, for the first time, it is said that project proponents will submit a CRZ map, indicating HTL/LTL demarcated by an authorized agency in 1:4000.
However, the question still remains, how this map prepared at 1:4000 is verified against the 1991 map (which exists in 1:25000).
It is well accepted that this ‘comparison’ at such vastly different scales will be scientifically incorrect. Therefore, in reality, the 1991 HTL/LTL is not used for project clearances.
The question now is, if this line of 1991, which is in fact, the ‘legal’ line demarcating the zone regulated for coastal protection, can be fixed or is it dynamic. If it is dynamic, what will be allowed and what not? The 1991 CRZ notification as well as its latest amendment in 2011 is silent on this issue.
In this case for instance, embankments because of saltpans in the area – incidentally allowed under CRZ – have changed the HTL/LTL. The port which is built subsequently, or the large reclamation allowed for this project, will also change the HTL/LTL. Similarly, reclamation legally allowed under the clearance given to the company will also shift the HTL/LTL.
But the problem is that while it is well accepted that the HTL/LTL will change with modifications in the shorefront, the 1991 and 2011 CRZ Notifications are silent on the issue. So, practice accepts it, but policy does not.
The notifications depend on the preparation of CZMP by the state government, which is to be the basis of this demarcation and categorization into CRZ I/II/III. But both notifications say that this CZMP will be done on the basis of a map prepared for the state at 1:25000. The approved CZMP, therefore, cannot be used to crosscheck or verify the HTL/LTL, which is drawn on the basis of cadastral maps of 1:4000, using field survey and geomorphological features to identify the HTL/LTL.
This confusion about the original HTL/LTL adds to the mistrust between project proponents and village communities and environmentalists. These issues need urgent resolution.
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5.2.2 Observation and Recommendation of this Committee
The Terms of Reference of this Committee include two specific issues regarding HTL that need to be examined: a. The allegations regarding bunding/diversion/blocking of creeks and reclamation etc. and thereby distortion of original HTL. b. The HTL submitted by the proponent and HTL of approved CZMP.
The detailed examination of these issues as done above shows the following:
First, the original HTL/LTL is at 1:25000, while as per the CRZ notification, the project level HTL/LTL is done at 1:4000. In this case, it has been done at various times, using different scales of 1:12500 to 1:5000. The original HTL cannot be matched to check against distortions, as there will be a large difference in the process of changing the scale from 1:25000 to 1:5000. It is at best a rough indication of the change.
The National Centre for Sustainable Coastal Management has carefully re-created the HTL demarcation done by different agencies for this project area over a period of time. The map clearly shows that the SAC map done at 1:25000 cannot be transferred between maps without distortion.
Secondly, the CZMP is also at the same scale of 1:25000 and it cannot be matched against the HTL submitted by the project proponent, which is at 1:5000.
Therefore, it cannot be verified if there has been a distortion of the original HTL.
The Committee has no doubt that the original HTL has got modified over the years. This modification is partly natural, partly human made because of the embankments created for saltpans, and it is also the result of direct project activities like setting up of the port or the extensive reclamation.
The map comparing HTL over the years shows clearly how this line has shifted. It also shows that the HTL done by different agencies for the project area cannot be compared or merged (see Box 5: HTL demarcation for Adani by different agencies). What is clear is that the policy for demarcation of CRZ needs urgent reform.
The Committee would recommend the following:
1. There should be an urgent review of the functioning and scientific protocols used by the agencies authorised by MoEF to undertake CRZ demarcation. There should be common guidelines for their operations so that there is uniformity and reproducibility of the work that is done. This is critical for ensuring verification and review. All codes of operation, including rates to be charges should be reviewed and made uniform for all agencies.
2. New agencies should be authorised and added to undertake this work, including state remote sensing agencies. All agencies should be required to follow uniform code of conduct and scientific practice.
3. All reports and maps prepared by the authorised agencies should be put in the public domain. We would recommend that all digitized maps at 1:4000 scale prepared by the agency for a project proponent should be sent to the National Centre for Sustainable Coastal Management. The Centre should collate all specific project maps on a national map based on the lat-long, and publish this on a national CRZ map in the public domain.
63 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
Box 5: HTL demarcation for Adani by different agencies
The National Centre for Sustainable Coastal Management (NCSCM) superimposed all the HTLs demarcated by different authorised agencies for the project area over different times and scales (see Figure 1: HTLs demarcated by Different Authorised Agencies for MPSEZL). On this the Survey of India High Water Line of 1983 and the SAC High Water Line of 1991, as prepared under an MoEF project, was superimposed.
As can be clearly seen, it is not possible to get one HTL for the entire project area using the work done by authorised agencies for the project proponent due to variations in scales, sites and methodologies. It is also not possible to compare these to the SAC 1991 High Water Line (which is the approved/original HTL) since the error as evident is huge again owing to difference in scales at which the SAC line and the project level lines have been marked.
Figure 1: HTLs Demarcated by Different Authorised Agencies for MPSEZL
None of the HTLs demarcated by different agencies for the Mundra SEZ and Waterfront development project match
Source: Analysis by the National Centre for Sustainable Coastal Management, Chennai, March 2013 based on different HTL demarcation reports submitted to the Committee by NIO, CESS and MoEF (SAC)
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At best for indicative purposes, the Survey of India 1983 High Water Line can be used for a comparison considering it to be the original HTL. Clearly, the HTL has shifted as envisaged due to interventions that happened in different project areas at different times. What is interesting is that none of the HTL demarcated by any of the agencies for the project proponents match either the SAC or Survey of India High Water Line. The CESS 2008 HTL demarcation is closer to the Survey of India line which maybe attributed to the fact that no development has yet happened for that area under the project and hence the area is devoid of any direct intervention.
The NCSCM carried out another analysis for the Committee. It analysed the HTL demarcation by different agencies in terms of the geomorphological signatures used by these agencies in marking the HTLs (see Figure 2: Basis of MPSEZL project HTL demarcation used by Different Authorised Agencies). As is evident, different organisations have used different geomorphological features to demarcate HTL. While CESS demarcated HTL based on width of creek, land-water contact, road and creek bund in 2008, it used sand bar, reserve forest boundary, existing port and bund for creek for its 2011 report. NIO used vegetation line for demarcating HTL for its 2005 survey while for the earlier survey (1999), it had used bund of the creek and man-made intervention. This again points to the flaw in methodology.
Figure 2: Basis of MPSEZL project HTL Demarcation used by Different Authorised Agencies
Agencies have used various geomorphological features top demarcate HTLs pointing towards lack of uniformity in methodology
Source: Analysis by the National Centre for Sustainable Coastal Management, Chennai, March 2013 based on different HTL demarcation reports submitted to the Committee by NIO, CESS and MoEF (SAC)
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4. Project-level HTL/LTL demarcation that is paid for by the proponent, should be replaced by state level exercise funded by the government. This will require greater clarity about the scales that will be used to do the local/project level map and the CZMP map. The current mapping guidelines, at two distinctly different scales (1:25000 and 1:4000) does not allow for verification of the HTL/LTL maps. It also does not allow for assessment based on the ‘original’ HTL/LTL and to check for deviation or distortions.
5. There is a need to decide on the issue of the ‘original’ HTL/LTL and how policy can and should reflect the dynamic nature of the coastline. The January 2011 CRZ notification recognizes the need for regular revisions. It directs state governments to prepare CZMPs within two years with maps of 1:25000, and also says that these plans will be revised every five years. Till then, the approved plans prepared under the 1991 notification will remain valid. Therefore, policy accepts that the coast is dynamic and changes must be monitored and captured in the demarcation. But the problem is that this map will be at the scale of 1:25000 and cannot be used to check against the project level map. Therefore, this issue needs urgent clarification and resolution.
6. MoEF should reexamine the current mapping being done in the country, in terms of the need for the clarity of the policy of scales and accuracy. Under MoEF, the Survey of India has mapped the country’s coasts at an accuracy of 10 cms for hazard line demarcation. In addition, currently exercises are being undertaken at the state level for preparation of CZMPs. But since these are being done using different methodologies and different scales, the use of these efforts for uniform national policy and practice is not possible. It is critical at this stage, when all this is being done, to prescribe a strict policy guideline so that the CRZ maps can be used for both state-level mapping and classification, and project level HTL/LTL demarcation.
7. MoEF should ensure that these maps are put in the public domain. Currently, there is resistance from defence and mapping establishments to the public use of these maps. But given the fact that CRZ is a regulated zone, it is critical there is transparency about developments on the coast. Regulation and monitoring is not possible without this.
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6. Critical Issues not in ToR
6.1 Fishermen Livelihood and Access to Fishing Grounds
Concerns have been expressed repeatedly regarding the impact of Mundra Port and SEZ and the thermal power plant (TPP) on the fishing community. Given such concerns, in most clearances granted by MoEF, conditions have categorically outlined the need to minimize the impact of the project on the fishing community and provide adequate and unobstructed access to fishing communities of their fishing grounds (see Table 12: Conditions Stipulated for Fishing Community).
Table 12: Conditions Stipulated for Fishing Community
Clearance date Condition stipulated for Fishing Community/Fishermen Access
1. September 20, 2000: Project proponent shall ensure that commercial fisheries are not hampered Port expansion due to the barges/vessels and activities in the region. Necessary plan in this regard shall be prepared in consultation with the NIO and submitted within 3 months.
2. July 21, 2004: Single It shall be ensured that there is no displacement of people, houses and fishing point mooring at Navinal activity as a result of the project.
3. February 5, 2007: Fishing activities by the fishermen living along the creek should not be hindered Multipurpose berth and a mechanism maybe evolved for the movement of fishing boats vis-a-vis at Navinal shipping activities.
Relocation of fisherman and local communities in the area to be done strictly in accordance with state government norms.
4. May 29, 2008: CRZ Intake and outfall should not cause any hindrance to the movement of local clearance for intake communities including fishermen. and outfall of TPP It shall be ensured that there is not displacement of people, houses of fishing activity as a result of the project. The pipelines shall not disturb the movement of fishing vessels or fishermen.
5. January 12, 2009: Water Shall be ensured that during construction/operation of the proposed jetty the front Development movements of fishermen vessels of the local communities are not interfered with.
Relocation of fisherman community in the area to be done strictly in accordance with state government norms.
6. May 20, 2010: Project proponent should not hamper the vocation of the fishing community in Phase III of TPP the area and the local fishers should be allowed to carry on their activities in the creeks.
Project proponent shall adopt the fishing community if displacement is to occur, especially those residing in and around Zarpara, Kotadi, Navinal and Tragadi.
A Fishermen Welfare Fund shall be created which will work towards creation of facilities for fish landing platforms/harbours/cold storage, etc., and providing relief in case of emergency.
Suitable screens shall be placed across the intake channel to prevent entrainment of life forms including eggs, larvae, juvenile fish, etc., during extraction of seawater.
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF and consents by State
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6.1.1 Observations on Fishing Community and Fisherman Access by Monitoring Committees/Courts:
Special Civil Application (SCA) No. 9309 of 2008 filed on July 15, 2008, by Jat Imran Salim and others, and Civil Application (CA) No. 8642 of 2008 filed on July 24, 2008 also by the same appellants, raised issues about filling work being done at Kotdi Creek-2, Baradi Mata Creek-1, Baradi Mata Creek-2. CA No. 8642 of 2008 additionally expressed concerns about inconvenience in fishing operations in the area due to limited or no access to fishermen in the area. Upon reviewing affidavits produced by the project proponents, the court observed that activities of the fishing community will not be affected, as licensed fishermen will be able to continue fishing as usual and hence disposed the cases.
Regarding concern about fishermen access to the coast raised during the public hearing held on October 5, 2010, the project proponents claimed that four locations have been identified as approach roads which are 4 m wide for fishermen to reach the coast. However the locations of the approach roads have not been clarified.
6.1.2 Examination of Issue by this Committee
On its visit to Mundra, the Committee met people from the fisher community and also visited their temporary settlements – where communities live for large parts of the year and undertake all activities connected to their profession. At Juna Bandar, APSEZL showed its work, that was being done to provide facilities like housing, sanitation, solar lighting and education. The community leaders at this site said that they had no problems with access to their fishing grounds.
However, at Bhadreshwar, the Committee met with fishers who had come from different settlements like Navinal and Luni. In this meeting, fishers explained how developments along the coast were impinging on their livelihoods. They explained that access to their settlements was often blocked. One specific instance, was the outfall channel of CGPL, which they said did cut off their access to the mainland and villages.
They also said that in all other cases the barriers prevented them to reach their settlements and often the guards did not recognize their identity cards. The Committee also saw these barriers – constructed for the SEZ and other projects – which would not allow for easy access to the coast.
They further pointed out that they had been promised an exclusive fishing harbor, which has remained half built.
Fishers who the Committee met said that they were beginning to see falling catch of fish, which they put down to the growing industrialization along the coast; discharge of hot water from TPP and depletion of mangroves, which provide breeding grounds for fish.
Their living conditions were also poor and inadequate. In certain cases, water supply was not available; education and health facilities non-existent and sanitation unavailable. Little attention had been given to their living conditions or welfare. The development on the coast – which was inhabited by them – had clearly little space for them.
6.1.3: Observation and Recommendation of this Committee
It is clear that this community, which depends on the coasts for their livelihood is the most vulnerable and most hit by development projects. Their economy depends on the health of the sea and its interface with land. Projects at the coast do not often respect the rights of fisherfolk, as unlike farmers and settled villagers, their access is not encoded and recognized. This is what clearly has happened in Mundra and needs to be urgently addressed.
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The Committee would make the following recommendations:
1. There must be a specific plan for fishers; access and their livelihood to address all these concerns. The EC conditions are also specific in this regard. But what is needed is much more than just paperwork and cursory attention. The plan must indicate the location of each settlement; its guaranteed access and facilities that will be provided. APSEZL must prepare this settlement-wise plan within six months with a clear schedule of implementation and monitoring.
2. The exclusive fishing harbor proposed at Badreshwar should be built so that there is facility for livelihood support. In addition, all fishers settlements located in the Waterfront (port) area must get adequate facilities for carrying out their economic activity. This facility should be built within a time period of two years.
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6.2 Village Common Land (Gauchar)
Villages have time and again contested land allocation for the development of port based Mundra SEZ. They argue that when gauchar land – village common lands used for livestock rearing – is transferred for industrial purposes, it adversely affects their agro-pastoral based livelihood security. Villagers also expressed concerns during the public hearing for SEZ on October 5, 2010, when it was contested that gauchar land in Luni village has been purchased by illegal means.
The only time a specific condition was stipulated was in the EC for Phase III of the TPP granted on May 20, 2010. It was indicated that project proponent should identify and develop new fodder farm/grazing land (gauchar). Financial commitment for the same was to be submitted to MoEF within three months of the clearance.
6.2.1 Observations on Gauchar Land by Monitoring Committees/Courts:
In SCA No. 7254 of 2008, filed on May 5, 2008 by Alabhai Rajde Batiya and others, it was argued that 1000 acres (42 hectares) of gauchar land has been allocated for industrial development in village Zarpara, for Mundra SEZ. Such allocation, according to the villagers is unlawful and unjustified, as gauchar land cannot be diverted for anything other than public purpose. Development of industries in SEZ according to them cannot be considered as public purpose. Concerns were also expressed regarding the gauchar land to cattle ratio, which villagers feared would be misbalanced, following such resumption.
The Gujarat High Court through order dated June 22, 2011 noted that the Zarpara village Panchayat adopted a unanimous resolution agreeing to allocate 1000 acres to MSEZL. Only after passing of such resolution by the Panchayat, the gauchar land was resumed by the Collector of Bhuj on November 19, 2007. Also the company was directed by the Collector to provide valuation of the land and amount required to be paid taking into consideration premium and conversion tax. Regarding the availability of gauchar land, the court concluded that cattle population to gauchar land ratio is adequately satisfied, and there was excess of gauchar land even after allocation. Based on such observations, the Court disposed the case.
However the court noted that resumption of Gauchar land should be followed by appropriate compensatory action by the Government. It is required for the Government, if possible, to earmark similar area of land out of Government wasteland to the Panchayat for gauchar. In the case of unavailability of wasteland, premium should be given to village Panchayat through Taluka Panchayat for acquisition of land for gauchar.
SCA No. 5386 of 2008 filed on February 22, 2008 by Valji Manshi Tapariya and others, also raised issues about gauchar land being allocated for industrial purpose to Mundra SEZ. SCA No. 17 of 2010 filed on December 24, 2009 by Ravubha Premsangji Jadeja and others, additionally brought out that land has been given to the company without extracting the appropriate value. According to the petition, gauchar land has been allotted for industrial purpose without charging additional 30 per cent market price from the respondent. Also no alternative grazing land has been given to the villagers.
The Gujarat High Court observed that Adani Trust Foundation vide a letter dated December 25, 2009, to the Sarpanch, Gram Panchayat, and villagers of Siracha, set forth proposal for 16 public projects to benefit the residents of the village in lieu of appropriation of gauchar land for industrial development. The proposal involved provisions for allocating areas for cowshed, providing drainage and drinking water facilities, construction of roads and infrastructure, health-care centers, etc. The purpose was to obviate some difficulties that might arise for the villagers from shrinking of gauchar land following its transfer for Mundra SEZ. Gram Sabha of
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Siracha unanimously agreed to accept the proposals set forth by Adani Foundation and agreed to cooperate as required.
Regarding valuation of land, the Court ordered that while resuming gauchar land for industrial purpose, State Government should collect 30 per cent of the market value by the way of premium from the project proponents. The court disposed the case on September 27, 2010.
6.2.2: Examination of Issue by this Committee
APSEZL has so far acquired 1200 ha of gauchar land for the purpose of SEZ development as per information provided by the company in March 2013.79 Information on the area of gauchar acquired as a percentage of the village common was requested from the Collector of Bhuj. But the information has not been made available, in spite of written requests from the Committee.
The break-up of Gauchar land, as acquired in nine villages is represented in the Table 13 given below. It can be seen that maximum amount of gauchar land acquisition has been in Mundra 489 ha and Zarpara village 405 ha.
Table 13: Gauchar Land Acquired for Mundra SEZ
S No. Village Gauchar Land (in ha)
1 Navinal 93.5
2 Goyrsama 27
3 Mundra 489
4 Mokha 42
5 Gundala 9
6 Luni 74
7 Baroi 20
8 Zarpara 405
9 Siracha 41
Source: Information provided by the Company to the Committee during the January 2013 site visit (for conversion from acre to hectare, 1 acre = 0.404 hectares)
6.2.3 Observation and Recommendation of this Committee
During its visit, the Committee learnt that in many villages the entire common land had been acquired. Given the pastoral nature of local economies, there is no doubt that this would have had adverse impacts on people, particularly the poor. It is well known that the poorest are most dependent on village commons as they do not have alternative sources for fodder or grazing lands.
The company officials explained to the Committee that they have decided to ask for government land and not purchase private land, which they would have got at cheap rates at the start because they wanted private landowners to benefit from the rising price of land in the years post-development of Mundra. While this approach does have merit, it does not consider the impact of the common land takeover on the poorest and the landless. This needs to be considered and repaired.
The key impact of a policy for takeover of village common lands used for critical functions of grazing and fodder in pastoral communities, is greater resentment against the project. This takeover hurts the poor, makes them more vulnerable and marginalized.
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The Committee recommends the following:
1. The state government should review the policy of acquisition and transfer of village common lands, not just in the specific case of APSEZL but also in other cases. These lands cannot be viewed as wastelands which are unproductive, and so transferred for what is considered a more productive purpose. Village common lands are degraded today because of overuse, not under-use. In other words, large number of people and their livestock depends on these lands, which leads to intensive use and degradation. Village common lands need strategies for improving productivity, which in turn will require investment and management by the community.
2. APSEZL should consider the voluntary return of grazing land and also invest in improving productivity of this land with villagers. The Committee notes that APSEZL has agreed, after discussions with Zarpara village to give back 161 ha of the 404 ha acquired by it. This is a welcome step. In the village meeting in Zarpara, the local community also appreciated this move by APSEZL.
But much more is required to be done. The fact is that many other villages are in a similar situation. The takeover of commons, in some cases all the land of the village, is leading to stress on the poorest and most marginalized. Given this, APSEZL should discuss with other villages and return back portion of the land, particularly of those settlements where there is no common land left, after acquisition.
In addition, it should work with the villagers, particularly, the poorest and landless, to improve productivity of the common lands. There should be investment in this area and this should be monitored for impact.
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6.3: Cumulative Impacts of Power Plants and Port Projects
There is no assessment of the cumulative impacts of power plants and port projects, which have been granted EC or are awaiting clearance. But the combined environment and social impacts could be potentially massive and must be understood so that remedial actions is taken.
6.3.1 Examination of Issue by this Committee
The Committee has analysed clearances for the coastal districts of Gujarat from the website of MoEF. This data is for the period April 2007 to March 2012 – 11th Plan Period.
In terms of TPP, only in Kutch district, 6195 MW has been sanctioned in the past five years (see Table 14: Power Projects in Coastal Districts of Gujarat – Cleared between 2007-2012). If this is added to clearance for CGPL and the Adani project Phase I (clearance given in 2007), then this district will have TPP of roughly 11,000 MW capacity. There is no assessment of the combined impact of these plants, which will require coal handling facilities, will emit air pollutants, discharge effluents and take seawater for cooling and process use. The combined
Table 14: Power Projects in Coastal Districts of Gujarat – Cleared between 2007- 2012
Project District Capcity (MW)
Adani Power Plant Kutch 660
Gallant Power Plant Kutch 12
Sanghi Industries Ltd. Kutch 120
Welspun Corporation Ltd. Kutch 123
Adani Power Plant Expansion Kutch 1980
Sanghi Energy Ltd. Kutch 1320
Adani Power Plant Expansion Kutch 1980
Saurashtra Super Thermal Power Plant Jamnagar 3960
Orient Abrasives Ltd. Porbandar 9
Saurashtra Cements Ltd. Porbandar 40
Shapoorji Pallonji Energy (Gujarat) Pvt. Ltd. Junagadh 1320
Videocon Industries Ltd. Amreli 1200
GSPC Gas Power Plant Amreli 1050
Bhavnagar Energy Co. Ltd. Bhavnagar 500
Dhuvaran Gas Based Thermal Power Plant Expansion Anand 395
Gujarat Paguthan Energy Gas Power Plant Expansion Bharuch 1050
Adani Power Dahej Ltd. Bharuch 2640
DGEN Gas Power Plant Bharuch 800
Raymond Ltd. Valsad 7.2
N R Agarwal Industries Ltd. Valsad 15
TOTAL 19181.2
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF
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impact of temperature of the water discharged into the sea and its implications for fish stock is not considered or assessed.
Similarly, in the case of ports (see Table 15: Status of Environmental Clearance of Ports in Gujarat), there is huge impact on the coastal environment with barriers impeding the natural movement of sand and destroying the formation of beaches.
These developments, taken together, could have huge adverse impacts on the environment and also on the livelihoods of fishing communities.
Table 15: Status of Environmental Clearance of Ports in Gujarat
Project District Company
Ports granted EC
Expansion and modernization of Pipavav Port Amreli Gujarat Pipavav Port Ltd.
Ship Building and Repairing yard Bhavnagar Modest Infrastructure Ltd.
Cargo Port Terminal Bharuch Adani Petronet (Dahej) Pvt. Ltd.
Expansion of waterfront facility Gujarat Maritime Board
Waterfront development Kutch MPSEZL
Ports awaiting EC
Development of Nargol Port Valsad Cargo Motors Pvt. Ltd.
Expansion of LNG Terminal Surat Hazira LNG Pvt. Ltd.
Expansion of Marine Terminal of Essar Jamnagar Vadinar Oil Terminal Ltd.
Port Crane Assembly Unit at APSEZ Kutch Anupam MHI Industries Ltd.
Ports granted ToR
Construction of Outfitting Jetty in existing Water Front facility Surat Larsen and Turbo Ltd. at Hazira manufacturing Complex
Crane Roll- On Jetty at West Port Kutch Adani Ports and SEZ Ltd.
Expansion of jetty and enhancement of the capacity of the Kutch ABG Cement Ltd. desalination plant
Port based Multiproduct SEZ Bhuj Kandla Port Trust
Installation of terminal facilities to handle LNG Bharuch Petronet LNG Ltd.
Expansion of Port Facility Surat Essar Bulk Terminal Ltd.
Development of Multipurpose Jetty within Navalakhi Port Rajkot DMCC Oil Terminal (Navlakhi) Ltd.
Multi Cargo Port with supporting utilities and infrastructure Surat Adani Hazira Port Pvt. Ltd. facilities
Development of Captive Jetty on Kori Creek Kutch Goodearth Maritime Ltd.
LNG Import Terminal at Pipavav Marine Facility Amreli Swan Energy Ltd.
Single Mooring Point (SMP) and Allied Facilities Kutch Kandla Port Trust
Source: Analysis by Centre for Science and Environment, New Delhi based on clearances granted by MoEF
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6.3.2 Observation and Recommendation of this Committee
It is imperative that development on the coast must take into account the cumulative impact and assess impacts on the environment.
The Committee recommends that MoEF should commission a comprehensive study on the cumulative impacts of projects, which have already been granted clearance. This study should be used to assess and mitigate impacts in the region. All future port and power plant projects should be assessed for clearance based on cumulative impacts.
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7. Summary of Observations and Recommendations
he Committee was tasked to examine specific issues, related to complaints regarding compliance with environmental conditions and Tallegations of distortion of the original HTL/LTL by M/s Adani Port and SEZ Ltd, located at Mundra in Gujarat. The Committee has in its review, taken a detailed, fact based assessment of each issue, based on documents, field visit and meetings with local community and company representatives. In addition, it has used satellite and Google Earth images to assess the time series changes in the landscape. This was done because it was not possible for the Committee to assess allegations of damage to mangroves and creeks systems, which have taken place over the past 6-7 years during the period of construction of ports, power plant and its ancillary facilities.
The allegations made against the company have centered on the following: a. There has been widespread destruction of mangroves, which was strictly prohibited in the clearances granted; b. The creeks and inter-tidal system has been adversely affected, particularly, the Kotdi creek, which has been blocked; c. There has been mismanagement of fly ash from the thermal power plant, which has resulted in fugitive emissions during disposal and pollution of groundwater; d. The large volume of seawater stored in the unlined pond and conveyed through the intake and outfall channel has increased salinity and contaminated water sources; e. The original HTL/LTL has been distorted because of human made bunds and blocking of creeks; f. The company is non-compliant with conditions imposed at the time of environmental clearance. 7. 1 Overall Observation and Assessment
In the Committee’s view the Adani Waterfront and Power Plant project, which has been granted clearance in different phases beginning 1995, has led to massive ecological changes with adverse impacts. The question before the Committee was to examine how much of this modification has been planned and allowed and how much is in violation of environmental conditions.
The Committee’s overall assessment is as follows: 7.1.1: Cases of procedural lapses G There has been an attempt to bypass the statutory procedures, by using different agencies, at the Centre and state, for obtaining clearances for the
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same project. For instance, while initially, the project was a combined SEZ and port project, in 2008, it was delinked so that MoEF clearance was sought only for the waterfront development component. At this stage, the company stated that it was seeking approval for phase 1 of the project (waterfront development) and the phase II project (remaining SEZ) would be taken up later. The Waterfront Development clearance was given to the company in January 12 and 19, 2009 and in the same month, on January 31, 2009 it approached MoEF for Phase II, which included social infrastructure. But simultaneously, it also applied to SEIAA for social infrastructure and common effluent treatment plant and both were granted clearance by SEIAA in February 2010.
G The public hearing procedure, which is a critical part of project clearance and helps to understand and mitigate the concerns of local people, has been bypassed on one pretext or another. For instance, in the Phase I of thermal power plant, public hearing was conducted. But in Phase II of TPP, the company asked for exemption saying that the project is within a notified power SEZ. This is even though the power SEZ did not have EC clearance, which would have allowed this exemption. In the case of multiproduct SEZ once again, the Company requested for an exemption and this was granted by EAC on the condition that the future projects within the SEZ would have to go through all procedures required for EC. Similarly, in all the expansions of the Waterfront Development project, the company has requested for exemptions to hold public hearing.
G The airstrip/aerodrome is part of SEZ and it was constructed without SEZ having an EC.
G The EAC on April 23-24, 2009, exempted the SEZ from public hearing, but put a strict condition that the project coming in SEZ in future shall undergo procedure as per EIA notification 2006. This would imply that all projects constructed within the SEZ should have EC as per EIA notification 2006. The Company has not adhered to this condition. 7.1.2: Cases of violations and non-compliance
Blocking of creeks, including Kotdi Committees which have visited the site during construction, have noted violations by the company in the matter of blocking of creeks. In 2006, the GCZMA committee had recorded that the company had built bunds in inter- tidal region and blocked many creeks. It is important to note that in the period that the GCZMA committee visited the site, the company had not received any environmental clearance, other than the development of Navinal port and related infrastructure. This could even mean that the company had started
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work prior to receiving environmental clearance. But it certainly suggests that there was work being done at the site, which was affecting creeks and mangroves.
Similarly, the 2010 MoEF Inspection Committee had also found obstruction of creek system and obstruction of natural flow of seawater because of reclamation.
The analysis of this Committee carried out based on satellite imagery (Landsat 5 TM) and Google Earth imagery from different years clearly shows:
G Baradi Mata creek has witnessed a distinct change at its mouth where the creek meets the sea. In 2005, the creek mouth had a natural outfall into the sea. In 2010, the creek opening shifted and got constricted. This is clearly because of construction for the Water Front Development Project. Under the EC conditions, no changes in creek or creek mouth are allowed. If no remedial action is taken urgently, there is danger of closing of the creek mouth due to accretion.
G The creek branches in the proposed North port site have completely disappeared over the years. This is bound to have an impact on the mangrove vegetation in the area in addition to the change in hydrological regime.
G A general accretion is observed in Kotdi Creek, which could be due to construction in the nearby inter-tidal area. This has led to widening of the mouth. There does not however appear to be any major change in the Kotdi creek network.
Destruction of mangroves Committees which have visited the project during its construction phase, have recorded rampant destruction of mangroves. It is important to note that the GCZMA committee visited the site before environmental clearance had been given for the project, except for Navinal port.
The analysis of this Committee clearly shows:
G Navinal creek: As per the EC granted in August 1995, for general cargo and storage at Navinal, a 100 meters mangrove belt was to be created west of the Navinal creek. Based on Google Earth imageries it is clear that there was a mangrove patch along the west of Navinal creek in the year 2005, but the same has vanished in 2011. This is in violation of not just the EC condition on mangrove destruction but also the specific EC condition related to Navinal for mangrove regeneration.
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G Bocha conservation area: The satellite imagery analysis, done by scientists from the National Centre for Sustainable Coastal Management shows that there has been a loss of seven ha of dense mangrove and 68 ha of sparse mangrove implying that a total of 75 ha of mangrove in Bocha Island have been lost. This clearly shows that the company had not taken any precaution to safeguard this conservation area.
G Proposed North port site: The mangroves at the proposed North port site have completely vanished. The creek has disappeared clearly due to the reclamation work at North port site.
G Mangrove conservation near Baradi Mata mouth: In its field visit in January 2013, the Committee noted degradation in the mangrove conservation area near the lighthouse at the South port. This was because of construction and reclamation activity. The company had clearly not taken precaution to ensure protection of mangroves. This is a clear violation of EC conditions.
Flyash utilization and disposal The issue of fly ash utilization and disposal is technically manageable. Given all the technologies, plans and capabilities of the company, it should be able to satisfactorily mitigate the hazards. But it is clear that there has been a problem in management on the ground. The GPCB field inspection report of April 2011 shows that there was disregard for local pollution being caused by fugitive emissions and discrepancy in accounting for fly ash utilization.
This Committee after assessment has also concluded the following:
G The inventory of fly ash given by the company/GPCB does not satisfactorily demonstrate proper utilisation/disposal of ash. For instance, the data from April 2012 to February 2013 indicates 90 per cent utilisation (including disposal in ash dyke). The unresolved issue is where the remaining 10 per cent of the fly ash and bottom ash (over 1,00,000 tonnes) is being disposed or utilised. This suggests that there would be possibility of dumping of ash, which would lead to air pollution and land degradation and would be termed as non-compliance.
G The EC conditions require the company to conduct regular monitoring in and around the ash pond area. However, in the compliance reports filed by the company, it is submitted that this condition is ‘not applicable’ – with the justification that there is 100 per cent utilization. But clearly, this is not the case. The company is in non-compliance with this condition.
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Increase of salinity because of guard pond/intake and outfall The careful review of all environmental clearance conditions show that the Company was sufficiently warned about the need to take all precautions to prevent salinity intrusion in the groundwater. However, it is apparent that the company has failed to fulfill this condition.
G The intake channel, the outfall channel and the raw water reservoir/guard pond are operational but without any lining/protection to protect against contamination of groundwater. The examination by the Committee shows that the soil in the area is permeable and without safeguards it will lead to contamination. This is a clear violation of the environmental clearance condition.
G The Committee is unable to establish if contamination has already occurred in the area, because of lack of data. However, this lack of data is also because the company has not monitored groundwater quality. This is a clear violation and shows non-compliance with the environment clearance conditions. The EC conditions stipulate that the company must monitor groundwater regularly for salinity and pollution. But it has failed to do so.
Samundra/Sterling The Committee is finding it difficult to reconcile the available reports to ascertain if the Sterling hospital and Samundra township have been constructed in violation of the CRZ. The coordinates taken by GCZMA inspection committee are not available on record for it to verify the location taken on this visit. The CESS report uses layout as provided by the company, which shows the structure to be outside CRZ. But using layout provided by the company cannot be used to establish the veracity of the exact location of the structures particularly in this instance of show cause notice.
Non-compliance with monitoring and reporting conditions It is clear that the company has been less than serious about reporting on compliance with the conditions set at the time of clearance. In many cases non- compliance with reporting conditions have been observed.
For instance, it is an EC condition to monitor the effluent discharge temperature to ensure that it does not exceed 7°C. It is stated that the inlet and outlet temperature should be measured daily and the difference should be within the stipulated limits. Temperature records enclosed as an annexure with the compliance report are not available. Fishermen in the area allege that the hot water released into the sea is affecting their small fish catch. Clearly, open and transparent monitoring would help to allay such concerns.
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The reports, which are a critical way to ensure that attention is being given to the remediation measures, are at best perfunctory and non-committal. Strict and regular adherence with these conditions, and regular and transparent monitoring would have obviated the need for site visit by this Committee and many others who have visited the project site. It would have also increased public confidence on the issue of compliance, i.e., whether conditions are being met or not.
7.2. Recommendation for effective deterrence for non-compliance and remedial measures
In the Committee’s assessment there is incontrovertible evidence of violation of EC condition and non-compliance. It must also be recognized that the Company has bypassed environmental procedures in certain cases.
The question before the Committee is to determine the future course of action. One option would be to recommend the cancellation of clearances, where procedures have been bypassed. In addition, legal proceeding could be initiated against non-compliance and violations of EC conditions. But it is also clear that these steps, however, harsh they may sound, are in the nature of being procedural and would only lead to delay without any gains to the environment and the people. The Committee is cognizant of the fact that large scale development has already been undertaken and it is not possible or prudent at this stage to halt or cease its operations.
Therefore, the Committee has decided to recommend a different course of action, which is both intended to be an effective deterrent and also suggests the way for future remedial action to improve the environment.
Given this the Committee recommends the following:
7.2.1 MoEF should impose a substantial deterrent for non- compliance and violations through the creation of an Environment Restoration Fund.
The Committee is aware that it is practically difficult to assign tangible and intangible costs to non-compliance and violations. However, the inability to quantify these costs should not deter us from setting precedence for the future. This will only result in the issue remaining unresolved and conflicted and will delay action to improve the environment and the livelihoods of people.
G Considering the scale of the project, the Committee would recommend that the Environment Restoration Fund should be 1 per cent of the project cost
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(including the cost of the thermal power plant) or Rs 200 crore, whichever is higher.
G The Environment Restoration Fund should operate under the chairmanship of the Secretary, MoEF and be used specifically for remediation of environmental damage in Mundra and also for strengthening the regulatory and monitoring systems.
G The purpose of the Fund should be the following: a. Protection of marine ecology; b. Protection and conservation of mangroves, including development of new mangrove conservation areas; c. Restoration and conservation of creeks; d. Independent studies and monitoring of the entire project areas, including cumulative impacts and public data disclosure systems. e. Social infrastructure and livelihood support for fishers community, including development of access of fishers from their temporary settlements to villages.
7.2.2. Cancel environmental clearance of North Port
There must be an increase in the mangrove conservation area to ensure ecological balance in this coastal zone. To do this, North port, which has received environmental clearance under the waterfront project, should be cancelled. The proposed North port is on the other side of Bocha island. Already, ship movement to and fro Navinal port, which borders the island, has had serious deleterious impact on the protected mangroves. This is visible, both in terms of the loss of mangroves in the vicinity of the Navinal port as well as the loss of vegetation and land area of Bocha island. 7.2.3 Specific recommendations on key remedial action
Creeks and inter-tidal system G The North port area, adjoining Bocha has connecting creeks, critical for maintaining inter-tidal action of the region. This area should be protected and all creeks and waterbodies restored and brought to pre-2005 status including that reclaimed by GMB/APSEZL. The entire area should be declared as a conservation zone, as it is contiguous to Bocha island and its important mangrove system. This conservation zone should be clearly earmarked and demarcated using lat-long so that monitoring is possible.
G The opening of Baradi Mata creek should be kept protected so that it is not damaged or blocked. This must be done for all other creek systems.
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Mangrove conservation G Bocha island and its conservation zone must be protected at all costs. It is clear that there is a possibility of further degradation of the remaining mangroves areas in the conservation zone. The Committee has identified the contiguous conservation area, which includes portions of the North port. This suggested increased conservation area has been plotted on a map (see section: mangroves). Based on the maps prepared by the Committee, the area of Bocha should be geo-referenced with lat-longs. This should be put in the public domain and there should be regular monitoring on the status of the land mass and vegetation of the island.
G The mangrove conservation area near the mouth of Baradi Mata must be protected and regenerated. An embankment to stop soil deposition into the creek, with buffer between the mangrove area and reclaimed land, should be made.
G All identified mangrove conservation areas as per the EC of January 2009 must be protected with adequate measures against erosion. These areas should be marked with lat-long so that regular monitoring for compliance, based on high-resolution maps, can be made publicly available.
G An action plan for protecting of all mangrove conservation areas including the proposed mangrove conservation area may be prepared and put in public domain, within three months, for monitoring.
Fly ash management and disposal G GPCB should set up a robust monitoring system, which is in the public domain that tracks and reports on, one, the quantum of fly ash generated by all the phases of the Adani thermal power plant and two, that can verify and audit the utilization of fly ash.
G The Company should submit a revised fly ash utilization plan to MoEF, which does not provide for its use in reclamation. This is because it is not possible to monitor and verify that domestic coal fly ash is not being disposed or used for reclamation in low-lying areas.
G The concern about fugitive emissions from transport and disposal of fly ash and contamination of the groundwater near the fly ash dyke and pond must be taken seriously by the regulating agencies and public monitoring systems must be evolved to check for contamination around the ash pond in particular.
Earthquake/Tsunami and project clearance The issue of coastal safety is a matter of great concern. Tsunami and
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earthquakes are threats to the area owing to its geological settings. But there has been no comprehensive assessment in terms of risk/hazard analysis.
G The Government should carry out an Impact Study especially in light of the Japan tsunami in 2011. Also, the disaster management plan of the different project proponents of MPSEZL should be linked to the 'District Disaster Management Plan'. This will be in the interest of the vulnerable people in and around the project area to ensure human safety with early warning practices. The Committee also recommends carrying out periodic mock drills along with district administration in and around the project area.
Salinity because of storage pond/intake and outfall G The intake and outfall channel must be reconstructed/repaired so that it has impervious lining at the bottom and sides.
G The raw water reservoir/guard pond must also be reconstructed/repaired so that it has impervious lining at the bottom and side.
G The Company should install network of piezometers with coordinates in the project area for monitoring of groundwater quality and water levels in all the seasons. These reports should be put in public domain, including its periodical submissions to GPCB and RO, MoEF, Bhopal.
G An independent study should be undertaken every five years to study saline water intrusion and to suggest remedial action.
G The Company should continue with closed cycle cooling system and recycling of FGD wastewater so as to reduce discharge and remain within the discharge capacity of the outfall channel.
Samundra/Sterling G MoEF should urgently take up this matter with GCZMA and ask for review and reassessment of the matter. This assessment should be based on fresh collection of coordinates, through a joint team. GCZMA should be directed to take necessary actions based on this visit. The map should be available in the public domain so that it can be verified and the matter closed satisfactorily.
Fishermen livelihood and access to fishing grounds G There must be a specific plan for fishers; access and their livelihood to address all these concerns. APSEZL must prepare this settlement-wise plan within 6 months with a clear schedule of implementation and monitoring.
G The exclusive fishing harbor proposed at Bhadreshwar should be built so that there is facility for livelihood support. This facility should be built 84 MoEF COMMITTEE ON ADANI PORT AND SEZ, APRIL 2013
within a time period of two years. In addition, all fishers settlements located in the Waterfront (port) area must get adequate facilities for carrying out their economic activity.
Village common land (Gauchar) G The state government should review the policy of acquisition and transfer of village common lands, not just in the specific case of APSEZL but also in other cases.
G APSEZL should consider the voluntary return of grazing land and also invest in improving productivity of this land with villagers.
Cumulative impacts of power plants and port projects G MoEF should commission a comprehensive study on the cumulative impacts of projects, which have already been granted clearance. This study should be used to assess and mitigate impacts in the region.
G All future port and power plant projects should be assessed for clearance based on cumulative impacts.
7.3 Specific recommendations on reform of CRZ regulations
G There should be an urgent review of the functioning and scientific protocols used by the agencies authorised by MoEF to undertake CRZ demarcation. There should be common guidelines for their operations so that there is uniformity and reproducibility of the work that is done. All codes of operation, including rates to be charges should be reviewed and made uniform for all agencies.
G New authorised agencies should be added to undertake this work, including state remote sensing agencies.
G All reports and maps prepared by the agencies should be put in the public domain. We would recommend that all digitized maps at 1:4000 scale prepared by the agency for a project proponent should be sent to the National Centre for Sustainable Coastal Management. The Centre should collate all specific project maps on a national map, based on the lat-long and publish this on a national CRZ map in the public domain.
G The project-level HTL/LTL demarcation, which is paid for by the proponent should be replaced by state level exercise, which is funded by the government. This will require greater clarity about the scales that will be used to do the local/project level map and the CZMP map. The current mapping guidelines, at two very different scales (1:25,000 and 1:4000) will not allow
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for verification of the HTL/LTL maps. It also does not allow for assessment based on the ‘original’ HTL/LTL and to check for deviation or distortions.
G There is a need to decide on the issue of the ‘original’ HTL/LTL and how policy can and should reflect the dynamic nature of the coastline.
G MoEF should relook at the current mapping work being done in the country, in terms of the need for this policy clarity. Under the MoEF, the Survey of India has mapped the country’s coasts at an accuracy of 10 cms for the hazard line demarcation. In addition, there are current exercises being undertaken at the state level for preparation of coastal zone management plans. But because these are being done using different methodologies and different scales, the use of these efforts for uniform national policy and practice is not possible. It is critical at this stage, when all this is being done, that there is careful policy guidance so that the CRZ maps can be used for both the statewise mapping and classification and the project level HTL/LTL demarcation.
G MoEF should ensure that these maps are put in the public domain. Currently, there is enormous resistance from defence and mapping establishments to the public use of these maps. But given the fact that CRZ is a regulated zone, it is critical there is transparency about developments on the coast. Regulation and monitoring is not possible without this.
7.4 Recommendations on project clearance conditions and post clearance monitoring
It is our assessment that the current regulatory system is not able to handle the complexity and size of projects of this nature. There is an urgent need to strengthen the monitoring abilities and to bring in public oversight.
The monitoring and auditing of such a large project is only possible, if the clearance conditions are specific and detailed, geo-referenced and there is a landsat imagery analysis to benchmark the project area, pre-construction. Without these benchmarks, it is not possible, to ascertain the extent and scale of the violations committed during construction and operation phase.
More importantly, a system should be developed so that all monitoring data is widely accessible by local communities to use and comprehend in terms of impacts.
There is a need to create a monitoring system to ensure that corrective action suggested by this report is taken within a time-bound manner.
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R E F E R E N C E S
3. Examination of Issues: Specific Environmental Impacts
1. National Institute of Oceanography, 2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, achchh district. 2. Ministry of Environment and Forests, 2010, Site Visit Report of Mundra Port and SEZ Limited to Port Site at Mundra, Kutch, Gujarat. 3. Gujarat Coastal Zone Management Authority, 2006. Site Visit Report of Mundra Port, Kutch, Gujarat. 4. Ministry of Environment and Forests, 2010. Site Visit Report of Mundra Port and SEZ Limited to Port Site at Mundra, Kutch, Gujarat. 5. District Collector, Kachchh, Gujarat, 2011, Field Inspection Report 6. Gujarat Maritime Board, March 22, 2013, un-numbered letter 7. Gujarat Maritime Board, March 22, 2013, un-numbered letter 8. Gujarat Maritime Board, March 22, 2013, un-numbered letter 9. National Institute of Oceanography, 2008, Marine EIA of the Water Front Development Plan (WFDP) of Mundra Port, Kachchh district. 10. National Institute of Oceanography, 2008, Marine EIA of the Water Front Development Plan (WFDP) of Mundra Port, Kachchh district. 11. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 12. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 13. Assuming working days as 330 14. Assuming working days as 330 15. Envirotech East Pvt. Ltd.,2007, EIA Study for Expansion of 1980 MW at Mundra Super Thermal Power Station under Phase II, Kachchh, Gujarat. 16. National Institute of Oceanography,2008, Marine EIA for Proposed Expansion of Thermal Power Plant (Phase III) at Tunda/Wandh Village, Kachchh, Gujarat. 17. National Institute of Oceanography,2008, Marine EIA for Proposed Expansion of Thermal Power Plant (Phase III) at Tunda/Wandh Village, Kachchh, Gujarat. 18. Indian Chamber of Commerce, 2012, The Indian Coal Sector: Challenges and Future Outlook, available at 19. Envirotech East Pvt. Ltd.,2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 20. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 21. Envirotech East Pvt. Ltd.,2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 22. Inspectorate Pvt. Ltd., 2008,Coal Analysis Study. 23. Envirotech East Pvt. Ltd.,2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 24. Inspectorate Pvt. Ltd., 2008,Coal Analysis Study. 25. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 26. Gujarat Coastal Zone Management Authority, January 6, 2011, Site Visit Report for Mundra Port and Special Economic Zone Limited 27. Adani Power Ltd. January 2013. Information submitted by Adani Power to Committee during field visit in January 2013. 28. Adani Power Ltd. 2012. Information submitted by Adani Power to Committee during field visit in january 2013.
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29. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 30. Ministry of Environment and Forests,2011,Report of Expert Group on Diversion of Forest Land for Establishing Mundra Port and Special Economic Zone. 31. Ministry of Environment and Forests,2011,Report of Expert Group on Diversion of Forest Land for Establishing Mundra Port and Special Economic Zone. 32. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 33. Paaliwal et al, 2012, Final report on “Groundwater Assessment Study”, National Productivity Council, Gandhinagar, Gujarat 34. Paaliwal et al, 2012, Final report on “Groundwater Assessment Study”, National Productivity Council, Gandhinagar, Gujarat 35. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 36. FICHTNER Consulting Engineers (India) Pvt. Ltd. Detailed Project Report of 2*330 MW Thermal Power Plant near Tunda village, Kutchh district. 37. National Institute of Oceanography,2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, Kachchh district. 38. National Institute of Oceanography,2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, Kachchh district. 39. National Institute of Oceanography,2008, Marine Environmental Impact Assessment for Proposed Expansion of Power Plant (Phase II) at Wandh, Gujarat. 40. National Institute of Oceanography,2008, Marine Environmental Impact Assessment for Proposed Expansion of Power Plant (Phase II) at Wandh, Gujarat. 41. National Institute of Oceanography,2008, Marine Environmental Impact Assessment for Proposed Expansion of Power Plant (Phase II) at Wandh, Gujarat. 42. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605 43. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 44. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 45. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 46. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 47. Envirotech East Pvt. Ltd., 2010,EIA Study for Phase – III (3*660 MW) Coal Based thermal power project at Tunda village,Kachchh,Gujarat
4. Compliance with Environment and Forest Conditions
48. Deputy Forest Protection Officer, East Kutch Forest Department, Bhuj-Kutch. un-numbered letter, Serial No. B/Jaman/T.9 49. Adani Power Limited. 2013.Information submitted by Adani Power to Committee following field visit in january 2013. 50. Gujarat Pollution Control Board, April 18, 2011, Letter no. NO-PC/CCA-KUTCH- 444/ID.29222/77605
5. HTL Line Demarcation
51. Ministry of Environment and Forests, December 15, 2010, Show Cause Notice under Sec.5 of EPA, 1986. Violation of provisions of the CRZ Notification, 1991 52. Gujarat Coastal Zone Management Authority, January 6, 2011, Site Visit Report for
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Mundra Port and Special Economic Zone Limited 53. Mundra Port and Special Economic Zone Limited. January 14, 2011, Response to Show Cause Notice under Sec.5 of EPA, 1986, dated 15th December 2010 54. Ministry of Environment and Forests, February 23, 2011, Letter No. 10-138/2008-IA-III 55. Mundra Port and Special Economic Zone Limited, March 28, 2011. Letter No. MPSEZL/section5/MoEF/03.11 56. Gujarat Coastal Zone Management Authority, April 29, 2011, Minutes of the 12th meeting 57. Gujarat Coastal Zone Management Authority. April 29, 2011. Minutes of the 12th meeting 58. Gujarat Coastal Zone Management Authority. July 27, 2011. Letter No. ENV-10-2011- 1169-E 59. Gujarat Coastal Zone Management Authority. July 27, 2011. Letter No. ENV-10-2011- 1169-E 60. National Institute of Oceanography,2007, Demarcation of HTL, LTL and Delineation of CRZ Boundary at Mundra and Tunda, Gulf of Kuchchh, Gujarat 61. National Institute of Oceanography, April 5, 2013, Letter No. NIO/NCZMA/1-12 62. National Institute of Oceanography, April 5, 2013, Letter No. NIO/NCZMA/1-12 63. National Institute of Oceanography, 2007, Demarcation of HTL, LTL and Delineation of CRZ Boundary at Mundra and Tunda, Gulf of Kuchchh, Gujarat 64. National Institute of Oceanography, 2007, Demarcation of HTL, LTL and Delineation of CRZ Boundary at Mundra and Tunda, Gulf of Kuchchh, Gujarat 65. National Institute of Oceanography, 2007. Demarcation of HTL, LTL and Delineation of CRZ Boundary at Mundra and Tunda, Gulf of Kuchchh, Gujarat 66. National Institute of Oceanography, April 5, 2013, Letter No. NIO/NCZMA/1-12 67. Centre for Earth Science Studies, 2008, CRZ Report for Mundra Port SEZ-Report 1 68. Centre for Earth Science Studies, 2011. CRZ Report for Mundra Port SEZ-Phase 2 69. Centre for Earth Science Studies, 2008. CRZ Report for Mundra Port SEZ-Report 1 70. Centre for Earth Science Studies, 2008. CRZ Report for Mundra Port SEZ-Report 1 71. Centre for Earth Science Studies, March 26, 2013, Electronic mail response 72. Centre for Earth Science Studies, 2011, CRZ Report for Mundra Port SEZ-Phase 2 73. Centre for Earth Science Studies, 2011, CRZ Report for Mundra Port SEZ-Phase 2 74. Centre for Earth Science Studies, March 26, 2013, Electronic mail response 75. National Institute of Oceanography, April 5, 2013. Letter No. NIO/NCZMA/1-12 76. Centre for Earth Science Studies, March 26, 2013, Electronic mail response 77. National Institute of Oceanography, April 5, 2013, Letter No. NIO/NCZMA/1-12 78. Ministry of Environment and Forests, December 1998, Demarcation oh High Tide Line/Low Tide Line in the Coastal Regulation Zone.
Box 2: Water requirement, discharge and capacity of channel 1. Telos Consultancy Services Pvt.Ltd. Rapid Environmental Impact Assessment for 2x330 MW Thermal Power Plant, Mumbai. 2. National Institute of Oceanography,2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, Kachchh district. 3. Envirotech East Pvt. Ltd., 2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 4. National Institute of Oceanography,2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, Kachchh district. 5. Envirotech East Pvt. Ltd., 2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 6. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district.
Box 3: Too many channels and no clarity 1. Envirotech East Pvt. Ltd., 2010, EIA Study for Phase III (3*660 MW) Coal Based thermal power project at Tunda village, Kachchh, Gujarat. 2. Envirotech East Pvt. Ltd., 2010, EIA Study for Phase III (3*660 MW) Coal Based thermal
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power project at Tunda village, Kachchh, Gujarat. 3. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 4. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 5. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 6. Gujarat Coastal Zone Management Authority. December 21, 2009. Minutes of the 83rd Meeting 7. National Institute of Oceanography,2006, Rapid Marine Environmental Impact Assessment of Proposed Thermal Power Plant at Wandh, Kachchh district. 8. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 9. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 10. National Institute of Oceanography,2009, Marine Environmental Impact Assessment for Proposed Expansion of Thermal Power Plant (Phase III) at Wandh,Kachchh district. 11. National Institute of Oceanography,2008, Marine Environmental Impact Assessment for Water Front Development Plan (WFDP) of Mundra Port, Kachchh district.
Box 4: Where is Bhukhi? 1. Centre for Earth Science Studies, 2011, CRZ Report for Mundra Port SEZ-Phase 2 2. Centre for Earth Science Studies, 2011, CRZ Report for Mundra Port SEZ-Phase 2 3. Letter from Expert Committee to Centre for Earth Science Studies. March 22, 2013 4. Centre for Earth Science Studies, March 26, 2013, Electronic mail response 5. Centre for Earth Science Studies, March 26, 2013, Electronic mail response
6. Critical Issues not in ToR
79. Adani Port and Special Economic Zone Ltd. March 2013.Progress report
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A N N E X U R E 1
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93
KARNATAKA LOKAYUKTA
No. COMPT/LOK/BCD/89/2007 Multi-Storied Building, Dr. B.R. Ambedkar Veedhi, Bangalore - 560 001.
Dated 27th July, 2011
REPORT ON THE REFERENCE MADE BY THE GOVERNMENT OF KARNATAKA UNDER SECTION 7(2-A) OF THE KARNATAKA LOKAYUKTA ACT, 1984 (PART – II)
Ref: (i) Govt. Notification No. CI 164 MMM 2006, dated 12/03/2007
(ii) Govt. Notification No. CI 164 MMM 2006 (Part), dated 09/09/2008
(iii) Govt. Notification No. CI 164 MMM 2006 (Part), dated 24/12/2008 and
(iv) Government Order No.CI 164 MMM 2006 (Part), dated 19/07/2010 - - - - - In exercise of powers conferred under Section 7(2-A) of the Karnataka Lokayukta Act, 1984 (hereinafter referred to as the ‘Act’), the Government of Karnataka, had referred the following issues for investigation and for submission of a report by the Lokayukta to the Government with specific recommendations, vide Government Order No. CI.164.MMM.2006 dated 12/03/2007. The scope of investigation, as per the said Government Order, covers the period from 01/01/2000 to 22/07/2006. Subsequently, vide G.O. No. CI 164 MMM 2006 (Part), dated 09/09/2008, the scope of investigation was extended till 09/09/2008 and vide No. CI 164 MMM 2006 (Part), dated 24/12/2008, the scope of investigation was further extended till 24/12/2008. Thereafter, vide No. CI 164 MMM 2006 (Part), dated 19/07/2010, the scope of investigation is
Report Page 1 of 464 further extended till 19/07/2010, after including one more term of reference, in addition to those contained in the G.O. dated 12/03/2007. The terms of reference as per G.O. No. CI 164 MMM 2006, dated 12/03/2007 are as follows:
The facts leading to the reference as well as the terms of reference are as follows:
“(i) The spurt in the international prices of steel and iron ore during last 3-4 years has made the mining and export of high quality iron ore from the mining in Bellary, Tumkur and Chitradurga Districts very lucrative. With the average cost of production of iron ore at around Rs.150 per ton, and the royalties to be paid to the Government being abysmally low at Rs.16.25 per ton for different grades there have been serious systemic distortions due to the high profit margins. This has led to allegations of large scale corruption and complaints of profiteering through illegal mining with the complicity of the authorities in all levels of Government.
(ii) The Government in its orders vide notification No. CI 16 MMM 2003 and No.CI 33 MMM 1994 both Dated: 15.03.2003, de-reserved for private, mining an area of 11620 square km in the State, meant for State exploitation/ mining by the public sector and notified the surrender of an area of 6832.48 hectares of prime iron ore bearing lands respectively, which has paved way for distribution of public assets to select private individuals,/ entities without regard to their professional or technical or business background.
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(iii) The entire exercise was undertaken in a manner so as to benefit only a select few individuals/entities. The main objectives behind de- reservation i.e. to encourage mining based industries to create more employment opportunities in private sector, to attract private capital and professional management for optimal use of state mineral resources were given a go by and allotments were made to the applicants on considerations other than merit.
(iv) It has been alleged that in the name of issuing temporary transportation permits to lift and transport iron ore in patta lands [which by itself is nor permissible in law], large scale illegal mining activity was allowed to be carried out for certain period, even in the forest areas, having no link to the survey numbers of patta lands and for transportation of the illegally mined ore from the forest areas on the strength of such forest passes/ transport permits.
(v) It has been reported that the State has been deprived of its revenues. There have been many complaints from transporters associations regarding overloading of Transport vehicles, that illegal gratification was sought for allowing overloading of iron etc., and the repeated complaints and representations by transporters associations, it has been alleged to have not been seriously considered by the Government. It is also alleged that most of the ore not accounted for and transported illegally in excess was the out come of illegal mining activities.
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(vi) In the inspection report of the Accountant General of Karnataka for the years 2003-2004 and 2004-2005 on Mysore Minerals Limited (MML), a public sector undertaking, several lapses were pointed out regarding various Memorandum of Understandings (MOUs), raising and marketing contracts, joint ventures etc., between Mysore Minerals Ltd., and Private Companies, wherein the interest of MML was compromised to deprive the PSU of the Contractual Entitlements, dividends and profits due to one sided agreements, non-revision or sub- optimal revision of prices resulting in losses amounting to crores of rupees at a time when the mining sector was generating huge profits.
(vii) It has also been noticed that the Iron Ore fines and mud stocks/ low grade ore far in excess of the quantity were allotted arbitrarily to select individuals through Mysore Mineral Ltd., much below the prevailing market price and MMTC price and even below the prices fixed from time to time by MML itself. There have been complaints of certain influential individuals who were part of the power structure within the Government, by manipulating the records and interfering in the affairs of MML, caused huge loss to the Corporation and the State, Similarly major and minor minerals such as granite, manganese and other minerals of the state, for the past several years, have been misused, indiscriminately exploited for benefiting a selected few resulting in loss of revenue to MML and the State.
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(viii) This has led to serious allegations and extensive debate on the floor of both the Houses of Legislature with references made to large scale illegalities, irregularities leading to enormous loss to State exchequer and plundering of state mineral wealth. Allegations have been leveled against various authorities of Government of complicity in illegal mining activities, which led the Hon'ble Chief Minister to give an assurance on the floor of the House that in order to ensure highest level of fairness and probity, an impartial inquiry will be ordered in to the illegalities which have taken place in Bellary, Tumkur and Chitradurga Districts.
The issues referred for investigation and report are as follows:
(a) Various alleged illegalities, irregularities, events, issues and executive and other decisions set out in clause (i) to (viii) and to assess the quantum of losses to the Government and to suggest remedial measures to undo such irregularities and illegalities.
(b) To enquire into the affairs so the Mysore Minerals Ltd., (MML) and its commercial activities carried out in a manner to cause losses to the company and the instances of direct/ indirect political interference/ patronage in the commercial affairs of the company. To fix responsibility and initiate suitable action, both, civil and/ or criminal as may
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be appropriate, against all persons found responsible, including private contracting parties.
(c) To fix responsibility and initiate suitable action against all public servants including ministers whether in office or otherwise state, its instrumentalities or State owned Companies/Corporations or other bodies and authorities, either in collusion with private parties or otherwise for various acts of omission and commission leading to various illegalities, irregularities, events and executive decisions set out in clause (i) to (viii) and also pertaining to issues such as:
(1) The process and timing of disposal of applications, both in case of notified areas and free areas, for grant of Mining Lease, Reconnaissance Permits and Prospecting Licenses;
(2) the irregularities reported in issue of permits by both Forest and Mines departments;
(3) the irregularities reported in transportation of minerals such as overloading, the issue of informal "token systems", transportation without permits etc;
(4) the entire range of the various aspects of illegal mining ranging from encroachments, mining without necessary permits and clearances, mining outside the permitted areas, mining beyond
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permitted quantities, illegal transportation of minerals etc.
(5) the mining and transportation of major minerals from Patta lands without valid mining leases etc;
(6) the legality in transfer of leases from one lease holder to another. This will include the case wise examination of legality and validity of grant of mining leases, with reference to the basic policy/ objectives behind the decisions taken to de-reserve the areas meant for exploitation by the public sector held and surrendered areas and the instances of direct or indirect political interference.
(d) All instances where the mandatory regulations and statutory provisions have been given a go-by and not observed, including environmental and other clearances, to directly or indirectly facilitate and/ or encourage illegal and/ or unregulated mining operations and to suggest remedial measures and suitable action against persons found responsible for their commissions and omissions.
(e) Any other related issues, event and/ or instance which the Hon'ble Lokayukta may deem fit and proper to go into the illegal and un-regulated mining and related issues, including de- reservation of the areas meant exclusively for public sector in Karnataka's mining regions ask mentioned above.
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(f) To comprehensively inquire into the charges, allegations, complaints of misuse and abuse of the office, if any elected representatives, ministers and officers who held or hold offices of profit for pecuniary benefit pertaining to illegal/ unregulated mining and incidental issues thereof, resulting in loss of revenue to the Government of Karnataka and Public Undertakings under the Government of Karnataka.
(g) Illegal granite quarrying in Bangalore Rural District and other Districts.
Subsequently, by the G.O. dated 19/07/2010, the following issue has been referred for investigation.
lJG®]|± &3¯w 8W8M3 5qG8 p¨ 9z qUJw rJwq8$L r¯wLW4$Y Dp r¯wLW]|± 5qG8 JG®o$]JrV¤9Jw5qG8W3t8m “Illegal mining in the State, mineral exported from the State in excess of the quantity permitted for transport.”
My earlier report (Part-I) dated 18/12/2008 on certain issues covered in the reference made by the Government has been sent to the Government. This is my second and final report on the reference made by the Government. Certain issues referred for investigation in the reference made by the Government could not be considered for the reason that despite repeated requests, the officers concerned did not furnish the records relating to the matter.
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After the receipt of G.O. dated 19/07/2010, public notices are once again issued in three Kannada and three English reading dailies having wide publicity in the State calling for statements relating to the issue referred for investigation from the persons acquainted with the said subject matter.
The services of the following officers/officials have been availed in the present matter under Section 15(3)(a) of the Karnataka Lokayukta Act, 1984, for the purpose of this part of the investigation.
1. Sri K.R. Chamayya, former Law Secretary, GOK and former Vice Chairman, Hon’ble Karnataka Administrative Tribunal
2. Dr. U.V. Singh, IFS, Chief Conservator of Forests, Lake Development Authority, Bangalore.
3. Sri Bishwajit Mishra, IFS, Deputy Conservator of Forests, Bannerghatta National Park, Bangalore
4. Sri Vipin Singh, IFS, Deputy Conservator of Forests and Project Director, Karnataka State Wide Area Network (KSWAN), e-Governance, DPAR, Bangalore 5. Sri K. Uday Kumar, Deputy Conservator of Forests, Lake Development Authority, Bangalore. 6. Sri K. Madhukar Shetty, IPS, Supdt. of Police, Karnataka Lokayukta, Bangalore City Division, Bangalore and his team
II Matters pertaining to various aspects of mining
Services of the Police Officers are also availed considering the magnitude of the investigation and the requirement of their services. Records relating to the subject matter of investigation have been secured from the Department of Commerce and Industries, Department of Forest, Environment and Ecology,
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Director of Mines and Geology, Revenue Department, Office of the Principal Chief Conservator of Forests, Director (Investigation), Income Tax Department, Bangalore, all Banks connected with the investigation including Reserve Bank of India, Ports and Customs Department, Directorate of Revenue Intelligence, Bangalore.
I may mention here that in a reference like this no notice is necessary to be given to the public servants who are indicted (Dr. K. Chowappa Vs State of Karnataka and others – ILR 1990 KAR 798). However, in some cases where it was felt necessary to obtain clarifications, comments have been secured from the concerned public servants after issuing notices to them and the same have been considered by me before recording my findings.
III OPENING REMARKS
In my report dated 18/12/2008, in regard to irregularities and illegalities in the mining in the districts of Bellary, Chitradurga and Tumkur, I had explained in detail my findings on those issues, which include;
(1) Grant of mining lease/prospecting license, permitting of raising contracts, an act of unknown to Mines and Geology (Development and Regulation) Act, 1957 (hereinafter referred to as the ‘M&M(D&R) Act’ for short) and Mineral Concession Rules, 1960 (hereinafter referred to as the ‘MC Rules’ for short).
(2) Irregularities in mining beyond the leased area, including by trespassing into the forest area;
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(3) Illegalities in transport of the minerals and consequent damage to roads and environment
(4) Illegalities in granting transport permit to transport and permitting transport of illegally mined ore either from regular leased mines or from patta lands.
(5) Illegalities in agreements entered into by Mysore Minerals Limited (for short ‘MML’) with private companies and loss suffered there from.
(6) Irregularities in de-reservation and allotment of such de-reserved areas to different applicants.
(7) Illegalities in transfer of mining leases.
Apart from the above, in the said report, I had conveyed my conclusions, suggestions and recommendations. But, I am sorry to say that apart from filing few criminal cases against some mining companies, no concrete actions have been taken, consequent to which the illegal mining as pointed out in the report herein above, has continued to exist. As a matter of fact, the reasons to be mentioned herein below, supported by documents, after my first report, illegalities in mining has increased and there is total failure of supervisory machinery in controlling all the above illegalities/irregularities.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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1 EXPORT OF ILLICIT IRON ORE OF KARNATAKA ORIGIN DURING THE YEARS 2006-07 TO 2010
INTRODUCTION
This Report primarily records the various methods used by the people involved in the mining industry to illegally lift, transport and export iron ore during the period 2006-2010 from the State of Karnataka. This report is based on the investigation report submitted by Dr. U.V. Singh and his team who have made an extensive study and have submitted very elaborate report supported by documentary evidence.
2) Supplies of iron ore for exports and for domestic consumption can only be sourced from leases granted by the Government. These leases are either in forest area, revenue lands or in patta lands (private lands). Extraction of ore from a lease is as per approved mining plan. Extraction of iron ore in a year has to be within an annual permitted quantity. Any quantity extracted beyond this annual permitted quantity is illicit. Further any quantity extracted and dispatched without paying royalty is illegal. The quantity of ore transported without transit permits (trip sheets, Form 31, Form 27) means non- payment of royalty and also theft of State property, hence has to be treated as illegal.
3) All operations within a lease area need to adhere to the lease conditions agreed by the lessee in the Lease Deed Agreement. Any mining activity, including extraction and transport in contravention of lease conditions is illegal. For example, mining operations carried out outside the leased area or mining operations carried out through “raising contractors”, production and dispatch without payment of royalty and not covered by permits are all illegal.
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4) Transport of iron ore from one place to another requires an authorized transit permit. No iron ore can be anywhere transported anywhere without having valid permits. These permits are issued by the Department of Mines and Geology (DMG) and also by the Forest Department, in leases given in Forest Land. Mineral Dispatch Permits (MDP) are bulk dispatch permits with a time limit of one month for completion of transportation. An MDP is issued to either a lessee or a registered stockyard owner and contains name of the lessee/ stockyard owner, source of iron ore, quantity and grade of ore, name of the party in case of sale, and destination of consignment, route etc. Along with a MDP individual trip sheets should accompany the vehicles which are permitted to carry 16 Metric Tons (MT) consignment of ore, in case of other heavy vehicles, there is higher permissible load. In addition, if a lease area falls within a notified forest, Forest Transit Permits are issued by Forest Department on the basis of MDP issued by the DMG. Like a trip sheet, Forest Transit Permits are issued for each lorry depending upon its legally permissible load or if it is less, the quantity will be mentioned specifically.
5) The starting point in all cases of iron ore transportation is either a lease or a registered stockyard of iron ore and no permits to transport iron ore can be issued from any other location. In exceptional cases permits may be issued for transporting ore from locations other than lease or registered stockyard in cases when illegally seized iron ore is auctioned. The destination point is usually a port, registered stockyard, domestic consuming units like steel plants, etc. Iron ore that is transported when permits have not been issued is illicit. Moreover iron ore transported in contravention of the stipulations mentioned in the MDP are also illicit.
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6) Like exporters of other commodities, exporters of iron ore have to register with the Director General of Foreign Trade and obtain an Import Export Code (IEC) Number. Due to the nature of the commodity, invariably, iron ore is exported through sea ports in bulk.
7) An exporter files shipping bill with customs for each export consignment of iron ore. The shipping bill is a customs document that contains, name and the address of the exporter, quantity and grade of iron ore to be exported, customs duty paid, name and the address of the consignee, destination port and country etc. The shipping bill also mentions state of origin of iron ore.
Methodology
8) For the purpose of this enquiry, the enquiring team has examined the MDPs issued to ports as destination and have taken them as the basis for calculation of quantity of iron ore legally permitted for export. In many cases benefit of doubts is given where there is no mention of port. Permits issued to the locations of ports (town, city, place, etc.) are also taken into consideration. Further shipping bills of iron ore exports having Karnataka as the State of origin have been taken as the basis for calculation of quantity of iron ore exported from the State. The investigating team has reported that the DMG did not have readily available compiled records of MDPs. Therefore, a database of MDPs for the period 2005-06 to 2010-11 was prepared during the enquiry (Annexure-1 of Chapter-1 of Dr. U.V.Singh’s Report). Shipping bills in respect of iron ore exports having Karnataka as the State of origin were obtained from the Custom Offices of all Ports through which iron ore of Karnataka origin is exported (Annexure-2 of Chapter-1 of Dr.
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U.V.Singh’s Report). These ports are Chennai, Ennore, New Mangalore, Murmagao, Panaji, Kakinada, Visakhapatnam, Krishnapatnam, Belekeri and Karwar. Information on exports of iron ore of Karnataka origin was also obtained from all the above port authorities. In addition responses of exporters to queries regarding procurement of iron ore for exports were considered. From the available data and information obtained, the investigating team has reported that;
(i) Information on exports available for periods prior to 2006 is incomplete for various ports. Therefore exports prior to 2006-07 have been excluded from this computation. The information of permit details with DMG is also not available for the period 2000 to 2004-2005.
(ii) In Goa, the Karnataka origin iron ore is blended with Goa origin iron ore to improve its Fe content in large quantity. Hence it is difficult to estimate the quantity of Karnataka origin iron ore exported through Murmagao and Panaji ports. Due to this reason, exports of Karnataka origin iron ore from Murmagao and Panaji ports have not been included in this chapter of the report. However, data on transport of iron ore to Goa through Railways has been compiled and analyzed in separate chapter.
(iii) M/s Obulapuram Mining Company (OMC) and M/s Y. Mahabaleshwara (YM) are big exporters of iron ore, who have mining leases in Andhra Pradesh that is adjoining to Karnataka. As per the available Customs data, they have exported
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iron ore of Karnataka origin. However, as per the permits database, no permits were issued to M/s OMC and M/s YM as party from Director of Mines & Geology, Karnataka.
(iv) As per the available data, the total exports of iron ore of Karnataka origin by M/s OMC during 2006-07 to 2010-11 is 71,61,455 MT, which includes 21,44,789 MT from Chennai Port. The total exports of iron ore of AP origin by M/s OMC from Chennai between 2006-07 and 2010 (till Dec) 2,17,660 MT only. (Annexures 3, 3A, 3B of Chapter-1 of Dr. U.V.Singh’s Report) The investigating team has reported that these export details requires further investigation. It is also stated that CBI is dealing with the matter in this regard and the said agency may take note of it.
(v) The total exports of iron ore of Karnataka origin by M/s Y Mahabaleshwara during 2006-07 and 2010 (till Dec) is 7,05,133 MT (Annexure-4 of Chapter-1 of Dr. U.V.Singh’s Report).
(vi) In view of the above, the investigating team has excluded the exports of Karnataka origin iron ore by M/s OMC and M/s YM from the computation made by them. (vii) In view of the above consideration, exports as per the customs data are compared with the permit data to compute port wise annual export of illicit iron ore for the period 2006-07 to 2010.
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Export of Iron Ore of Karnataka Origin
9) Iron ore of Karnataka origin is exported through following ports: Sl. Name of Port Located in State No. 1 Belekeri Karnataka 2 Chennai Tamil Nadu 3 Ennore Tamil Nadu 4 Kakinada Andhra Pradesh 5 Karwar Karnataka 6 Krishnapatnam Andhra Pradesh 7 Murmagao Goa 8 New Mangalore Karnataka 9 Panaji Goa 10 Visakhapatnam Andhra Pradesh
10) The table below gives the annual exports and total exports of iron ore of Karnataka origin through different ports as per the data obtained from respective Customs Offices. The total export of iron ore of Karnataka origin during the period 2006-07 till 2010 was 12.57 Crore MT. The figures exclude exports through Murmagao and Panaji ports and exports by M/s Obulapuram Mining Company and M/s Y Mahabaleshwara.
Table – Total export of iron Ore of Karnataka Origin in Metric Tons (MT)
Port / Grand 2006-07 2007-08 2008-09 2009-10 2010 Years Total Belekeri 43,09,527 62,01,908 17,71,256 65,01,805 15,84,481 2,03,68,977 Chennai / 62,29,020 1,05,84,118 86,50,900 80,20,479 17,67,401 3,52,51,917 Ennore* Kakinada 32,17,681 15,88,389 11,58,892 16,04,008 5,49,131 81,18,101 Karwar 13,78,776 18,51,025 24,23,995 15,58,061 4,68,134 76,79,991 Krishna 6,29,830 19,69,078 65,26,577 1,00,86,277 53,18,164 2,45,29,926 patnam New 53,15,222 83,17,818 89,11,456 56,28,426 10,46,386 2,92,19,308 Mangalore Vishaka 4,31,076 51,155 9,191 50,644 81,951 6,24,018 patnam Total 2,15,11,131 3,05,63,491 2,94,52,267 3,34,49,700 1,08,15,648 12,57,92,238
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* Destination in Mineral Dispatch Permits (MDP) in many instances is Chennai though material may have been exported through Ennore and vice versa. Hence export figures of Chennai and Ennore are clubbed.
11) The proportional share of exports through various ports is depicted through a pie chart below:
Figure - Port wise Share in Export of Iron Ore during 2006-07 to 2010 (till Dec)(Quantity in MT)
The bar chart below shows the year wise comparison in quantity Figure – Year wise Export of Iron Ore of Karnataka Origin (Quantity in MT)
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Permits for Domestic Consumption
12) The table depicted below shows year wise issue of permitted quantity in MT for domestic consumption (where destination name is given as name of any domestic destination in the state and other states) is given below.
Table – Permits for domestic destinations (Quantity in MT)
Year 2006-07 2007-08 2008-09 2009-10 2010-11
Permits to Domestic 88,52,169 1,68,05,157 1,65,09,162 1,88,26,875 70,60,005 Destinations
13) The above information reveals that permits for domestic destinations in MT increased from 88.52 Lakh MT in 2006-07 to 1.68 Crore MT in 2007-08. Thereafter the permits issued for domestic consumption in MT remained steady between 1.68 Crore MT and 1.88 Crore MT in the period 2009-10. Permits issued for domestic consumption in 2010 (April to July) were 70.6 Lakh MT. Hence there were no large fluctuations in permits issued for domestic consumption in the last 5 years.
1. Export of Illicit Iron Ore of Karnataka Origin
14) The tables below show the year wise exports, permits and exports in excess of permitted quantity for each of the ports.
Iron Ore Exports (MT) 2010 Port 2006-07 2007-08 2008-09 2009-10 (Apr-Dec) Belekeri 43,09,527 62,01,908 17,71,256 65,01,805 15,84,481 Chennai / Ennore 62,29,020 1,05,84,118 86,50,900 80,20,479 17,67,401 Kakinada 32,17,681 15,88,389 11,58,892 16,04,008 5,49,131 Karwar 13,78,776 18,51,025 24,23,995 15,58,061 4,68,134 Krishnapatnam 6,29,830 19,69,078 65,26,577 1,00,86,277 53,18,164 Mangalore 53,15,222 83,17,818 89,11,456 56,28,426 10,46,386 Vishakapatnam 4,31,076 51,155 9,191 50,644 81,951 Mineral Dispatch Permits (Iron Ore permits for ports) (MT)
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2010 Destination Port 2006-07 2007-08 2008-09 2009-10 (Apr-Jul**) Belekeri 32,43,296 45,58,414 15,53,093 28,50,965 4,25,040 Chennai/Ennore 90,01,445 97,71,492 71,72,969 62,01,921 13,79,816 Kakinada 19,54,027 17,12,296 10,94,536 14,46,144 2,79,504 Karwar 20,32,015 24,74,833 21,57,436 9,98,038 3,07,824 Krishnapatnam 1,07,883 15,29,335 40,18,416 49,54,122 27,49,176 Mangalore 48,94,448 61,64,277 70,02,262 37,21,270 7,85,618 Vishakhapatnam 1,38,965 38,089 11,400 1,03,200 2,64,000 Ports Not Known* 3,80,565 13,47,750 10,88,704 4,27,200 -
* Quantity in respect of permits where name of port is not clearly identified
** Ban of issue of permits for destinations for exports since 28-07- 2010
Table showing exports of illicit iron ore port wise year-wise.
Exports of Illicit Iron Ore (MT) Port 2006-07 2007-08 2008-09 2009-10 2010 Grand (Apr-Jul) Total Belekeri 10,66,231 16,43,494 2,18,163 36,50,840 11,59,441 77,38,169 Chennai / *** 8,12,626 14,77,931 18,18,558 3,87,585 44,96,699 Ennore Kakinada 12,63,654 *** 64,356 1,57,864 2,69,627 17,55,501
Karwar *** *** 2,66,559 5,60,023 1,60,310 9,86,892
Krishna 5,21,947 4,39,743 25,08,161 51,32,155 25,68,988 1,11,70,994 patnam Mangalore 4,20,774 21,53,541 19,09,194 19,07,156 2,60,768 66,51,433
Visakha 2,92,111 13,066 *** *** *** 3,05,177 patnam Grand 35,64,717 50,62,470 64,44,364 1,32,26,596 48,06,719 3,31,04,866 Total
*** Quantity in permits exceed export quantity. This may be due to data gap in exports or some other reasons. This needs further investigation.
Less Permits 3,80,565 13,47,750 10,88,704 4,27,200 - 32,44,219 for Port Not Known Exports of 31,84,152 37,14,720 53,55,660 1,27,99,396 48,06,719 2,98,60,647 Illicit Iron Ore (MT)
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A bar graph depicting Year wise exports without permits is given below:
Based on the figures compiled from the Customs and Department of Mines and Geology, it is computed that 2,98,60,647 Metric Tons (around 2.98 Crore MT) of Illicit iron ore was exported during the period 2006-07 to 2010.
2. Estimated Value of the Iron Ore quantity exported illicitly
15) An estimate of the value of iron ore exported illicitly has been made by taking average annual export sale rate (in US Dollars) of iron ore across all ports and the corresponding average annual INR value of US Dollar as computed in the table below.
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Table – Computation of Rupee Value of Illicit Iron Ore Exported
Average Sale Average Quantity of Rate for Export Rupee illicit iron of iron ore Value of Year ore exported Value in Rs across all ports US $ during the during the year during year (US $) the Year 2006-07 31,84,152 56.71 45.11 8,14,56,59,755 2007-08 37,14,720 115.70 40.12 17,24,32,99,332 2008-09 53,55,660 94.28 45.89 23,17,13,12,262 2009-10 1,27,99,396 76.38 47.42 46,35,86,39,228 2010 (till 48,06,719 124.70 45.65 27,36,25,12,277 Dec) Total 1,22,28,14,22,854
As computed in the table above, estimated value of 2,98,60,647 Metric Tons of illicit iron ore exported during the period 2006-07 to 2010 is Rs 1,22,28,14,22,854/-
3. Analysis of Transport of Illicit Iron Ore for Export
16) The illicit iron ore transported to Port for exports could have been transported either through; a) Vehicles travelling with permits but carrying ore in excess of the quantity permitted per truckload i.e. overloading; or
b) Vehicles travelling without any permit; c) Vehicles travelling with forged permits
All such transports at (a), (b) and (c) above have contributed towards transportation of illicit iron ore to the ports as computed above. Therefore, the investigating team has made an analysis to assess the illicit iron ore that might have been transported as overloading or without any permits or with forged permits. The investigating team has observed that quantity thus computed is purely suggestive and is based on the overloading in vehicles carrying iron ore to Belekeri port during Oct 2009 – May 2010.
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17) As per the data seized from computers of M/s Adani Enterprises Ltd and M/s Shree Mallikarjun Shipping Pvt Ltd, the average per truckload quantity received in Adani plots and Shree Mallikarjun plots in Belekeri port was 20.26 MT as against permitted load of 16 MT. The data pertains to 2,99,255 trips to Belekeri port between the period October 2009 to May 2010. The team has assessed that the total 2.986 Crores of MT of illicit iron ore that was transported to ports in excess of permitted quantity, significant quantity of illicit ore might have been transported through vehicles overloading. It is pertinent to note that the computed figures point towards large scale transport without any permit or with forged permit in the two years of 2009 and 2010.
4) List of Exporters with the quantity of Iron Ore (of Karnataka Origin) who have exported through various Ports
18) List of exporters with the quantity of iron ore as per permits issued for various ports during the period 2006-07 to 2010 (till Dec) has been enclosed by the investigating team at page numbers 16, 17, 18, 19, 20, 21, 22 and 23 of Chapter-1. A profile of the exporters as per the Director General of Foreign Trade (DGFT) is at Annexure 5 of Chapter-1.
5) List of exports after imposition of ban on issue of permits for destinations for exports by the Government from 28/07/2010.
19) According to the investigating team, there were 83 exports of iron ore after the ban on issue of permits for destinations for exports. It is pertinent to note here that due to large scale of exports of illicit iron ore the State Government took a decision on 28/07/2010 to ban issue of permits to destinations for
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exports. In that context, exports after this date have been obtained from all the ports and it is found that there were 83 exports with a total quantity of 17,58,336 MT of iron ore. Out of this quantity, the maximum exports have taken place from Krishnapatnam port which is administered and managed by a private company i.e. Krishnapatnam Port Company Limited (KPCL). The quantity exported from this port alone was 14,85,076 MT. This specific matter requires further investigation for finding out illegalities and persons responsible/behind it.
20) A list of exports that took place after “ban on issue of permits for destinations for exports” by the Government from 28/07/2010 is given by the investigating team in the Table shown herein below.
List of Exports of iron ore after the Ban on Issue of permits for destinations for exports by the Government on 28/07/2010 Quantity Sl Date of Exporter 1 Exported Vessel Name Port of Origin No Export (MT) Billion Wealth 1 29-07-2010 56,142 MV. CAPE COSMOS Krishnapatnam Minerals 2 RB Sheth 29-07-2010 47,485 MV. HUA JIN CHUN Krishnapatnam Swastik Steels 3 30-07-2010 29,630 MV. CHENG GONG Krishnapatnam Hospet Lakshminarayana 4 02-08-2010 16,000 MEDI CORK Chennai Mining SSTA Logistics 5 04-08-2010 24,761 MV. CHENG GONG Krishnapatnam India Dream Logistics MV. VINALINES 6 04-08-2010 9,500 Krishnapatnam India STAR Dream Logistics 7 04-08-2010 33,600 MV. TIAN LI HAI Krishnapatnam India 8 SB Logistics 07-08-2010 87,600 MV. TOP FLIGHT Krishnapatnam Arihant Tiles & 9 07-08-2010 28,000 MV. TOP FLIGHT Krishnapatnam Marbles Vaishnavi Anand 10 07-08-2010 49,025 MV. CHENG GONG Krishnapatnam Projects MV.MARITIME 11 PEC 07-08-2010 34,146 Krishnapatnam TOBONIO 12 PEC 09-08-2010 14,500 MV.NAVIA ELIZA Krishnapatnam MV. LISBON 13 PEC 09-08-2010 500 Krishnapatnam TRADER 14 Hothur Traders 10-08-2010 37,260 CAPE COSMOS Chennai
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(EOU) MV. LISBON 15 BGH Exim 10-08-2010 18,130 Krishnapatnam TRADER 16 Sesa Goa (EOU) 10-08-2010 60,500 MV. NAVA ELIZA Krishnapatnam Cauvery Coffee 17 10-08-2010 6,000 MV. INTA Krishnapatnam Traders 18 Rajmahal Silks 11-08-2010 12,000 MV. DONG JIN Krishnapatnam Taurian Iron & 19 11-08-2010 24,100 MV. FLORINDA Krishnapatnam Steel Prathyusha 20 11-08-2010 38,500 MV.FLORINDA Krishnapatnam Associates Prathyusha 21 11-08-2010 10,195 MV.AVENTICUM Krishnapatnam Associates Swastik Steels MV.CAPE SANTA 22 12-08-2010 42,200 Krishnapatnam Hospet MILAGRIA MV.GENCO 23 ILC 12-08-2010 39,600 Krishnapatnam PIONEER 24 KIOCL 12-08-2010 49,900 MT MAPLE HILL Mangalore MV.GENCO 25 Sesa Goa 13-08-2010 15,000 Krishnapatnam PIONEER Parakrish Mineral 26 16-08-2010 1,000 IN SANTOS Chennai Enterprises Deccan Mining FIVE STARS 27 16-08-2010 38,800 Chennai Syndicate GALAXY Bharat Mines & 28 16-08-2010 39,000 MV.HUA XIN Krishnapatnam Minerals 29 Rajmahal Silks 16-08-2010 17,500 MV.ORIENT PEARL Krishnapatnam Bharat Mines & 30 17-08-2010 35,000 CHENG GONG Chennai Minerals Bharat Mines & MARITIME 31 17-08-2010 39,600 Chennai Minerals NEWANDA Bharat Mines & MARITIME 32 17-08-2010 7,700 Chennai Minerals NEWANDA Muneer 33 17-08-2010 30,443 MV. ORIENT PEARL Krishnapatnam Enterprises Srinivas Minerals 34 17-08-2010 21,000 MV MAHA DEEPA Krishnapatnam Trading Co Deccan Mining 35 17-08-2010 26,500 MV.NORD SPRING Krishnapatnam Syndicate 36 SB Logistics 17-08-2010 49,500 MV.KEN SIRIUS Krishnapatnam 37 Rajmahal Silks 18-08-2010 14,000 MV.YONG PING 5 Krishnapatnam RR Global 38 18-08-2010 31,000 MV.YONG PING 5 Krishnapatnam Enterprises 39 Terapanth Foods 19-08-2010 31,500 MV.IRENE Krishnapatnam Prathyusha 40 20-08-2010 31,200 MV.BOSCO SUN Krishnapatnam Associates RR Global 41 20-08-2010 2,000 MV.BOSCO SUN Krishnapatnam Enterprises Trident Minerals 42 23-08-2010 28,000 NOVO MESTO Chennai (EOU) Trident Minerals 43 23-08-2010 20,000 NOVO MESTO Chennai (EOU) 44 Rajmahal Silks 23-08-2010 1,110 MV.BOSCO SUN Krishnapatnam Bagadiya 45 23-08-2010 8,930 MV.IRENE Krishnapatnam Brothers
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Sri Venkateswara 46 23-08-2010 18,000 MV.SPAR JADE Krishnapatnam Exports Sri Chitra Agri 47 23-08-2010 9,000 MV.SPAR JADE Krishnapatnam Exports Sri Vijayalakshmi 48 23-08-2010 9,000 MV.SPAR JADE Krishnapatnam Sortex 49 BGH Exim 26-08-2010 5,000 MV. ROSY FALCON Krishnapatnam 50 Seabase Impex 26-08-2010 15,413 MV. SAGAR KIRAN Krishnapatnam Shantadurga 51 27-08-2010 32,000 MV. SAGAR KIRAN Krishnapatnam Transport State Trading 52 28-08-2010 28,420 MV. SAGAR KIRAN Krishnapatnam Corporation Mineral 53 04-09-2010 18,900 MV. SAGAR KIRAN Krishnapatnam Enterprises Mineral MV. 54 Enterprises 04-09-2010 9,900 Krishnapatnam CONSTANTINOS G (EOU) Mineral 55 Enterprises 04-09-2010 7,700 MV. QUEEN KOBE Krishnapatnam (EOU) Sri 56 Kumaraswamy 13-09-2010 23,100 MV. QUEEN KOBE Krishnapatnam Mineral Exports MV. GOVIND 57 Stemcor India 27-09-2010 35,200 Krishnapatnam PRASAD Shivashankar 58 12-10-2010 42,000 MV.CHENG GONG Krishnapatnam Minerals Mineral 59 13-10-2010 8,800 MV.MEISTER Krishnapatnam Enterprises Mineral 60 13-10-2010 300 MV. LIVANITA Krishnapatnam Enterprises Mineral 61 13-10-2010 400 MV.CHIOS JOY Krishnapatnam Enterprises Mineral MV. RAINBOW 62 Enterprises 15-10-2010 751 Krishnapatnam LUCKY (EOU) Mineral 63 Enterprises 03-11-2010 3,900 MV. CHRISTINA IV Krishnapatnam (EOU) Mineral MV. ETERNAL 64 03-11-2010 12,550 Krishnapatnam Enterprises OCEAN 65 KGC Enterprises 04-11-2010 6,050 MV. VLADIMIR Krishnapatnam Mineral 66 11-11-2010 1,645 MV.CAPE COSMOS Krishnapatnam Enterprises Bharat Mines & MV.LUMOSA 67 11-11-2010 10,000 Krishnapatnam Minerals KARVNIA Lakshminarayana 68 11-11-2010 13,700 MV. RISHIKESH Krishnapatnam Mining Co (EOU) Shivashankar MV. OCEAN 69 12-11-2010 30,000 Krishnapatnam Minerals PRELUDE 70 Sree Minerals 12-11-2010 21,000 MV. IYO WIND Krishnapatnam Prathyusha 71 13-11-2010 11,300 MV. IYO WIND Krishnapatnam Associates 72 Sree Minerals 17-11-2010 2,000 MV TUAN DAO WAN Krishnapatnam Get Minerals & 73 19-11-2010 18,900 M.V.Chimes Krishnapatnam Coal
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74 PEC 02-12-2010 36,000 MV. INTREPID Krishnapatnam MV. HONG KONG 75 PEC 04-12-2010 1,000 Krishnapatnam STAR Mineral 76 Enterprises 16-12-2010 1,100 MV. ANNOULA Krishnapatnam (EOU) Mineral 77 16-12-2010 3,900 MV.MAJOR Krishnapatnam Enterprises Alpine 78 18-12-2010 14,000 MV.FINE STAR Krishnapatnam International Vibhutigudda 79 20-12-2010 3,600 MV. JINWAN Krishnapatnam Mines MV. DUBAI 80 KGC Enterprises 20-12-2010 1,250 Krishnapatnam FORTUNE Mineral M.V.DUBAI 81 21-12-2010 500 Krishnapatnam Enterprises FORTUNE MV.CIELODIMON 82 BGH Exim 23-12-2010 22,000 Krishnapatnam FALCON E 83 Upkar Mining 24-12-2010 22,000 M.V.AZIZI Krishnapatnam Total 17,58,336
6) List of Consignees with quantity of iron ore (Karnataka origin) imported through various Ports.
21) There are 228 consignees that have imported iron ore of Karnataka origin. A list of such consignees and quantity imported during the period 2006-07 and 2010 (till December) (See Table – 9 of Chapter – 1of Dr. U.V. Singh’s Report).
22) From the above said facts and circumstances, the following conclusions are drawn by the investigating team.
1. Since 2006-07 to 2010 (Till Dec), the total exports of iron ore of Karnataka origin is about 12.579 Crores MT from the ports of Belekeri, Chennai, Ennore, Kakinada, Karwar, Krishnapatnam, New Mangalore and Visakhapatnam ports. The exports from Murmagao and Panaji ports are not included in this quantity.
2. Based on the permits issued by the Mines and Geology Department, the computation has been
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done separately for each port. The difference between permit issued and export made for the said period comes approximately to 2,98,60,647 MT. This is the illicit iron ore exported during 2006-07 to 2010 (till December) from the ports as mentioned in Para 1. 3. It is stated here that there is an approximate quantity of 32,44,219 MT of iron ore, where there is an ambiguity with regard to exact destination to specific ports. However, giving the benefit of doubt this quantity has been subtracted from the total quantity of export of illicit iron ore and the quantity in Para 2 has been arrived accordingly.
4. Out of the 5 Financial Years for which computations have been done, the highest quantity of exports of illicit iron ore has taken place in Year 2009-10, which is approximately 1,27,99,396 MT. Further it is equally pertinent to note that in Year 2010-11( when permits for destinations for exports were issued for 4 months), the quantity of illicit iron ore that was exported was approximately 48,06,719 MT, which is higher than the exports of illicit iron ore for entire year of 2006-07, 2007-08 and almost equal to the entire year of 2008-09. This indicates the continuity of magnitude of exports of illicit iron ore even after the raids conducted by the Lokayukta at Belekeri in February 2010 and the issue widely reported in the media.
5. The approximate loss to the state government due to illegal exports comes to approximately
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Rs.1,22,28,14,22,854 for the above said period. The loss is calculated by taking the yearly average export rates / MT from all the ports.
6. The loss to the tune of Rs. 1,22,28,14,22,854 caused to the state government due to illegal iron ore exports for the period should be recovered from the exporters/suppliers/traders/lessees and others after following due process of law. Further any other contemplated actions required against the said responsible persons/ companies/firms/others should also be taken up under the relevant Acts and Rules.
7. There were about 252 Exporters engaged in export of iron ore of Karnataka origin during the period from all the ports.
8. There are about 228 consignees who have imported iron ore of Karnataka origin.
9. During the port wise examination with regard to illegal export, it is found illicit iron ore has been proportionately exported more from the Belekeri and Krishnapatnam ports. Both the ports are run by private companies.
10. There is ban on issue of permits for destinations for exports since 28/07/2010. But it is observed that there were 83 exports with a total quantity of 17,58,336 MT of iron ore after this date. Out of this quantity the maximum exports have taken place from Krishnapatnam port which is
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administered and managed by a private company i.e. Krishnapatnam Port Company Limited (KPCL). The quantity exported from this port was 14,85,076 MT. This specific matter requires further investigation for finding out the illegalities and persons responsible behind it.
11. Having carefully studied the contents of the exhaustive report submitted by the investigating team, the report of which is annexed to this report of mine, I am in agreement with the findings and suggestions made by the team and I recommend that a thorough audit be made in regard to all the issues that have been discussed hereinabove. The perpetrators of these illegal exports of iron ore which has caused the State to suffer huge financial loss should be identified and the loss should be recovered from such companies/persons. It is relevant to state herein that the Hon’ble Supreme Court had appointed a Central Empowered Committee (CEC) to look into such irregularities. The Committee in one of its report has suggested to the State, that the value to be recovered from such persons responsible for illegalities should be five times the value prevailing at the time of the commission of offence and their respective lease, licence, permits should be withdrawn forthwith. This suggestion of the CEC, I think, is appropriate and hence, I recommend the same to the Government.
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23) Having recorded the overview of the irregularities herein above, I will consider the irregularities and illegalities committed by the companies/individuals, specifically.
24) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
25) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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2
EXPORT OF ILLICIT IRON ORES FROM BELEKERI PORT
In the report of Dr. U.V. Singh committee found at Chapter-2 at pages 1 to 65, large scale irregularities and illegalities that have taken place in a small port situated at Belekeri, South of Karwar in Uttara Kannada District. While this Report of mine is in continuation of my first report submitted by me in the month of December 2008, the happenings at Belekeri port has a special significance for this report. Hence, I attach a lot of importance to this part of the Report.
2) As stated in Dr. U.V. Singh’s team report referred to above, the Belekeri is a fair weather port. In this port, the Government has leased out certain areas within its limits to private companies, who are port service providers in this port. They are; (1) M/s. Shree Mallikarjun Shipping Private Limited (SMSPL);
(2) M/s. Adani Enterprises Limited (AEL); (3) Sri Salgaonkar Mining Industries Private Limited; and (4) M/s.Raj Mahal Silks.
These service providers provide infrastructural facilities like Jetties, barges, shelter, road and other basic amenities, including loading of cargo onto the ships. The service provider companies maintain the data of truck wise quantity received, name of the supplier, place of origin of sources of iron ore, name of the transporter, invoice holder name, name of the exporter, ship details, quantity loaded in ship and particulars of the company who are loading the iron ore, particulars of barges used for transshipment, payments made and the method of payment i.e., cash/cheque to various stake holders. The
Report Page 32 of 464 practice of loading minerals in the ships which carry them to other countries, at Belekeri port is that these ships which are berthed in deep sea are loaded with cargo by taking the cargo from the port through barges. The activities of the port are supposed to be controlled by the Port authorities under the Karnataka Ports (Landing and Shipping Fees) (Amendment) Rules, 2006 and other related enactments. The port is not equipped with Coast guards for monitoring of movement of vessels and others activities as found in ports like Mangalore. There is no watch tower and other infrastructure to keep control of illegal activities in the port. Dr. U.V. Singh’s team report cited above has observed that Belekeri port should not have been allowed to export iron ore, until security and other arrangements are upgraded. It is a factor to be taken note of, by the Government.
3) On 20th February 2010, the Lokayukta police raided the Belekeri port and seized documents and computers, etc while the Forest Department seized certain quantities of iron ore, which was illegally extracted and transported during 2009-10. It is because of this, a separate chapter is included in this report. The facts discovered here speak for themselves. On 20th February 2010, on a complaint by one Sri Desai and also on the reliable information, the Lokayukta police conducted a raid at Belekeri port and seized certain documents and computers, etc. A forest offence case was registered in FIR 17/2009-10 dated 15/3/2010 by forest department against the Port Conservator of Belekeri port. On 20/3/2010, iron stored in the port area was seized and the Forest Department handed over the iron ore seized to the Port Conservator, Belekeri for safe custody. In June 2010, it was found that large portion of the seized iron ore was stolen from the port. Subsequently, cases of theft and other
Report Page 33 of 464 offences have been registered against the Port Conservator and companies/firms and others by the jurisdictional police. Various agencies including CID, Forest Department are conducting investigation of the said case.
4) During the raid on 20/2/2010, the Lokayukta Police have seized computer and other documents, including forged permits, from the office of the Adani Enterprises and SMSPL. From the seized electronic records, lot of materials, including the mode of illegality in export of iron ore by the said company was noticed. Investigating team, sought details of Adani Enterprises and Mallikarjun Shipping Private Limited (SMSPL) from the period 20/2/2010 till the date of furnishing the information. The information received are annexed to the report of Dr. U.V. Singh in this regard. From the information gathered, it was seen that 2.30 crores of MTs of iron ore was exported from Belekeri port between 2006-07 and April-May 2010. As against this, the total permits issued for transport of iron ore to Belekeri port during the same period was for 1.26 crores MTs. Therefore, it is clear that 77.38 Lakhs MTs of illicit iron ore was exported from this port during the above said period. From Table-1 of the report of Dr.U.V. Singh, it is seen that M/s. Adani Enterprises and M/s. Sri Mallikarjun Shipping Private Limited, has on an average received 20.26 MTs of iron ore per lorry as against 16 MTs per truck load permitted. The data received also refers to 2,99,255 trips of loaded lorry carrying iron ore to Belekeri port between the period 2009 and May 2010. The data also indicates that over loading of trucks carrying iron ore is a routine practice leading to substantial iron ore theft.
5) The information gathered also indicates the number of trucks used and their Registration numbers. As per this
Report Page 34 of 464 information 16,383 truck registration numbers are mentioned, the name and address of the Transport Company/ owners of these trucks, who were also responsible for transporting illicit iron ore, should be obtained from these numbers and further investigation in regard to their involvement should be carried out. There may be many forged registration numbers or duplicate numbers, involving in illegal transportation.
6) From the experience gathered during the course of investigation, it cannot be believed that the load as shown in lorries are correct, on the contrary is bound to have overloaded material which can be proved by various documents. As per Table-1, 77,38,139 MTs of illicit iron ore was exported through Belekeri port between 2006-07 and April-May 21010. It is also noted that majority of illegal transportation of iron ore without any legitimate permit has occurred during 2009-10 upto April- May by a process called “Risk Amount”. In regard to this system, there is discussion in this report in other chapters.
7) There had been instances of Xerox copies of bulk permits purportedly issued from Andhra Pradesh being used for transportation of illicit iron ore. The details of which have been given in Annexure-3 of Chapter-2 of Dr. U.V. Singh’s report. Most of the time, the iron ore illegally extracted and transported have come from Hospet, Sandur, Bellary, Koppal and some other places. Some samples of such permits are enclosed to the report of Dr. U.V. Singh, which indicates the origin of the iron ore. The iron ores, which were seized from the premises of Belekeri port from Sri Mallikarjun Shipping Private Limited and M/s. Adani Enterprises on 20/2/2010. Such permits were used in 2008-09. It is further noticed that in the months of April – May 2010, 15.84 Lakh MTs of iron ore was exported through
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Belekeri port, out of which 11.59 Lakhs MTs was illicit. Similarly, in 2009-10, 65.01 Lakh MTs of iron ore was exported through Belekeri out of which 36.50 Lakh MTs was illicit. The illicit ore include iron ore brought without permit or forged permits and iron ore brought by forged permits in the vehicle, which had permits for illicit ore. This elaborately shows all the Lorries that were carrying illicit iron ore are in violation of Laws.
8) Table – 2 of the Report of Dr. U.V. Singh names the transport companies involved in such illegal transportation. Table-3 indicates the name of companies/firms, using the forged permits, out of which most of them were accompanied by a voucher issued by M/s.Manjunatheshwara Minerals and M/s. Shafia Minerals. The list in Table-3 is not exhaustive one because it pertains to a short period. For further particulars in regard to the irregularities in transport and export of iron ore, Annexures of Chapter-2 to the report of Dr. U.V. Singh’s team referred to in this report may be perused.
9) Something significant that is noticed from Tables 4, 5 and 6 are that 44 companies/firms were supplying iron ore exclusively to Adani plot of Belekeri port, 30 companies/firms were supplying iron ore exclusively to Mallikarjun plot and 8 companies/firms were supplying iron ore to both at Adani and Mallikarjun plot. It is also to be seen that in most of the cases, the quantity supplied by the companies were much more than the quantity for which they had obtained permits for the corresponding period, indicating that illicit iron ore was being exported. There is also material to come to the conclusion that in many cases, permits have been issued later while the iron ore was supplied earlier. In such cases, permits of large quantities were issued during March and corresponding quantity of
Report Page 36 of 464 material was not supplied thereafter against those permits. This clearly indicates that such companies/firms had obtained permits to cover up the earlier transportation of illicit iron ore. It is also noticed that this cover up was done in response to the Lokayukta raid in February 2010 and subsequent actions. The suspect companies in this regard are Bharat Mines and Minerals, Rajmahal Silks, SSTA, VSL, Twenty First Century, Eagle and Balaji Enterprises, the details of which are found in Table-7 of Dr. U.V. Singh’s Report.
10) Out of the seized data of Belekeri port, some records indicate the source of iron ore i.e. mining lease or stockyard. Table 8 of the report has made detailed examination of various companies and mines and transporters involved in this type of irregular illegal export of iron ore, where the source lease or stockyard is mentioned in the records. The details of which are as under:-
Shree Mallikarjun Shipping Private Limited (SMSPL)
1. Name of the Company/firm :DLC
a) Name of the Lease from whom iron ore was allegedly transported : Gogga Gurushanthaih and Brothers:
As per the electronic records seized on 20/2/2010, a total of 14,797 MTs of iron ore was supplied, between 16/11/2009 to 28/11/2009, at SMSPL’s Plot in Belikeri port, in the name of DLC (GG Mines). The term “GG Mines” clearly indicates that the material has come from mine belonging to Gogga Gurushanthaiah and Brothers. On verification of permit records, it is found that no
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permits for Belekeri were issued from the said lease, with DLC as party, during the above said period. This indicates that the iron ore was illicit.
b) Name of the Stockyard from which the iron ore allegedly transported is Continent Impex Private Limited As per the electronic records seized, a total of 2,723 MTs of iron ore was supplied, between 9th January and 14th January 2010 at SMSPL’s Plot in Belekeri Port, in the name of DLC CIPL (VDHALLI). The term “CIPL” clearly indicates that the material has come from stock yard belonging to Continent Impex Private Limited. On verification, it is found that no permits for Belekeri were issued from the said stockyard, with DLC as party, during the above mentioned period. This indicates that the iron ore was illicit.
c) Name of the Lease from whom the iron ore was allegedly transported: Shanthalakshmi Jairam: As per the electronic records seized, a total of 13,507.8 MTs of iron ore was supplied between 6th January and 18th February 2010, at SMSPL’s plot in Belekeri Port in the name of DLC NAGAPPA. The term “Nagappa” clearly indicates that the material has come from “Nagappa Mine” belonging to lessee Shanthalakshmi Jairam. ON verification, it is found that no permits for Belekeri were issued from the said lease, with DLC as party, during the above
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mentioned period. It indicates that the iron ore was illicit.
d) Name of the Lease from which the iron ore was allegedly transported: S.B Minerals, Lease No. 2515. As per the electronic records seized, a total of 410.5 MTs of iron ore was supplied, between 26th October and 12th November 2009, at SMSPL’s Plot in Belekeri port, in the name of DLC SVK. The term “SVK” clearly indicates that the material has come from SVK Mines, belonging to lessee SB Minerals, lease No.2515. On verification, it is found that no permits for Belekeri were issued from the said lease, with DLC as party, during the above mentioned period. This indicates that the iron ore was illicit.
e) Name of the Stockyard from which the iron ore was allegedly transported: Dream Logistics: As per the electronic records seized, a total of 1,37,954.71 MTs of iron ore was supplied between 29th October and 3rd December 2009 at SMSPL;s Plot in Belekeri port, in the name of JUNJUNBAIL DLC, (S2), (S3), (S3A). The term “JUNJUNBAIL” clearly indicates that the material has come from the stockyard of “Junjunbail belonging to Dream Logistics (DLC). On verification it is found that no permits for Belekeri were issued from the said stockyard, with DLC as party, during the above mentioned period. This indicates that the iron ore was illicit.
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f) Name of the Lease from whom the iron ore was allegedly transported: S.B. Minerals, Lease No.2550. As per the electronic records seized, a total of 16,683.9 MTs of iron ore was supplied, between 13th November 2009 and 18th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of DLC with supplier at SVK JAISINGPURA. The term “SVK JAISINGAPURA” clearly indicates that the material has come from “SVK JAISINGPURA Mine” belonging to Lessee S.B. Minerals with Lease No.2550. ON verification, it is found that no permits for Belekeri were issued from the said lease, with DLC as party, during the above mentioned period. This indicates that the iron ore was illicit.
g) Name of the Lease from which the iron ore was allegedly transported: S.B. Minerals, Lease No.2515. As per the electronic records seized, a total of 13,684.22 MTs of iron ore was supplied, between 27th October 2009 and 17th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of DLC with the supplier as SVK Danapur. The term “SVK DANAPUR” clearly indicating that the material has come from “SVK Mine” belonging to Lessee S.B. Minerals with lease No. 2515. On verification, it is found that no permits for Belekeri were issued from the said lease, with DLC as party, during the above mentioned period. This indicates that the iron ore was illicit.
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2. NAME OF THE COMPANY/FIRM : V.S. LAD
Name of the Lease from which the iron ore was allegedly transported: V.S. Lad. As per the electronic records seized, a total of 67,054.976 MTs of iron ore was supplied, between 19th November 2009 and 18th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of VSL. The term “VSL” clearly indicating that the material belongs to mining lease of “M/s. V.S. Lad ML No.2290”. On verification, it is found that only 10,000 MT of permits for Belekeri were issued with VSL as party, during the above mentioned period. This indicates that rest of the iron ore was illicit.
3. NAME OF THE COMPANY/FIRM : SSTA
Name of the Lease from which the iron ore was allegedly transported: Nadeem Minerals. As per the electronic records seized, a total of 2455.73 MTs of iron ore was supplied, between 13th January 2010 and 17th January 2010, at SMSPL’s Plot in Belekeri Port, in the name of SSTA NADEEM. The term “NADEEM” clearly indicating that the material has come from “Nadeem Mine” belonging to Lessee Nadeem Minerals. On verification, it is found that no permits for Belekeri were issued from the said lease, with SSTA as party, during the above mentioned period. This indicates that the iron ore was illicit.
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4. NAME OF THE COMPANY: SUNRISE
Name of the Lease from which the iron ore was allegedly transported: S.B. Minerals, Lease No.2515. As per the electronic records seized, a total of 4978.29 MTs of iron ore was supplied, between 20th December 2009 and 6th January 2010, at SMSPL’s Plot in Belekeri Port, in the name of Sunrise with the supplier as SUNRISE SVK. The term “SVK” clearly indicates that the material has come from “SVK Mine” belonging to Lessee S.B. Minerals with lease No. 2515. On verification, it is found that no permits for Belekeri were issued from the said lease, with SUNRISE as party, during the above mentioned period. This indicates that the iron ore was illicit.
5. NAME OF THE COMPANY : I.L.C.
a) Name of the Lease from which the iron ore was allegedly transported: S.B. Minerals, Lease No.2515. As per the electronic records seized, a total of 18,169.65 MTs of iron ore was supplied, between 3rd December 2009 and 5th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with supplier as SVK Fines. The term “SVK” clearly indicates that the material has come from “SVK Mine” belonging to Lessee S.B. Minerals with lease No. 2515. On verification, it is found that no permits for Belekeri were issued from the said lease, with ILC as party, during the above mentioned period. This indicates that the iron ore was illicit.
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b) Name of the stockyard from which the iron ore was allegedly transported: ILC Stockyard at Bevinahalli. As per the electronic records seized, a total of 1,16,639.83 MTs of iron ore was supplied, between 26th October 2009 and 18th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with the supplier as ILC BEVINAHALLI. The term “BEVINAHALLI” clearly indicating that the material has come from ILC Stockyard at Bevinahalli, Koppal. On verification, it is found that permits for only 7,752 MTs of iron ore was issued for Belekeri from the said stockyard, with ILC as party, during the above mentioned period. This indicates that the remaining 1,08,888 MTs of iron ore, which was transported was illicit.
c) Name of the Lease from which the iron ore was allegedly transported: Trident Minerals. As per the electronic records seized, a total of 2345.85 MTs of iron ore was supplied, between 30th December 2009 and 14th January 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with the supplier as ILC (TM). The term “T.M” clearly indicates that the material has come from “T.M Mines” belonging to Lessee Trident Minerals. On verification, it is found that no permits for Belekeri were issued from the said lease, with ILC as party, during the above mentioned period. This indicates that the iron ore was illicit.
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d) Name of the Stockyard from which the iron ore was allegedly transported: Stockyards at P.K.Halli. As per the electronic records seized, a total of 27,782.25 MTs of iron ore was supplied, between 9th January 2010 and 18th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with the supplier as ILC (PK HALLI). The term “P.K.HALLI” clearly indicates that the material has come from “P.K. Halli” area which has few stockyards. On verification, it is found that permits for only 992 MT Lumps from Lakshmi Venkateshwara Minerals Stock yard on 2 February 2010 were issued to ILC, permit No.143366. This indicates that the rest of the iron ore was illicit.
e) Name of the Lease from whom the iron ore was allegedly transported: Shanthalaksmi Jairam. As per the electronic records seized, a total of 78,041.77 MTs of iron ore was supplied, between 29th October 2009 and 18th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with the supplier as ILC NAGAPPA. The term “NAGAPPA” clearly indicates that the material has come from “Nagappa Mine” belonging to Lessee Shanthalakshmi Jairam. On verification, it is found that no permits for Belekeri were issued from the said lease, with ILC as party, during the above mentioned period. This indicates that the iron ore was illicit.
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f) Name of the Lease from whom the iron ore was allegedly transported: S.B. Minerals, Lease No.2515. As per the electronic records seized, a total of 8330.62 MTs of iron ore was supplied, between 26th October 2009 and 6th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of ILC with the supplier as ILC SVK. The term “SVK” clearly indicates that the material has come from “SVK Mine” belonging to Lessee S.B. Minerals with lease No. 2515. On verification, it is found that no permits for Belekeri were issued from the said lease, with ILC as party, during the above mentioned period. This indicates that the iron ore was illicit.
6. NAME OF THE COMPANY : SMSPL
Name of the Stockyard from which the iron ore was allegedly transported: Stockyards at Junjunbail. As per the electronic records seized, a total of 13,415.98 MTs of iron ore was supplied, between 8th November 2009 and 13th February 2010, at SMSPL’s Plot in Belekeri Port, in the name of Mallikarjun with the supplier as SMSPL (JUNJUNBAIL). The term “SMSPL (JUNJUNBAIL)” clearly indicates that the material has come from “Junjunbail, Kalaghatgi”. On verification, it is found that no permits for Belekeri were issued from the said place, with SMSPL as party, during the above mentioned period. This indicates that the iron ore was illicit.
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7. NAME OF THE COMPANY : ARSHAD
Name of the Lease from which the iron ore was allegedly transported: S.B. Minerals. As per the electronic records seized, a total of 9,730.26 MTs of iron ore was supplied, between 18th December 2009 and 4th January 2010, at SMSPL’s Plot in Belekeri Port, in the name of ARSHAD EXPORT, with the supplier as ARSHAD SBM. The term “SBM” clearly indicates that the material has come from “SBM Mines”. On verification, it is found that no permits for Belekeri were issued from the said lease, with Arshad Exports as party, during the above mentioned period. This indicates that the iron ore was illicit.
Adani Enterprises Private Limited (AEL):
1. Company: ALPINE INTERNATIONAL
Name of the lease from which iron ore was allegedly transported: VESCO
As per the electronic data, a total of 714.06 MT of iron ore was supplied, in 24 Feb 2010 to 26 Feb 2010, at Adani Enterprises Private Limited (AEL) plot in Belekeri port, with the supplier name as ALPINE INTERNATYIONAL C-ORE (VESCO). The term “VESCO” clearly indicating that the material has come from VESCO mines. On verification it is found that no permits for Belekeri were issued from the said lease, with ALPINE as party, during the above mentioned period. This indicates that the iron ore was illicit.
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2. Company: BMM Name of the lease from which iron ore was allegedly transported: Bharath Mines & Minerals As per the electronic data, a total of 2,11,422.88 MTs of iron ore was supplied, from 16 Nov 2009 to 15 May 2010, at Adani Enterprises Private Limited (AEL) plot in Belekeri port, with the supplier name as BHARATH MINES & MINERAL, (BMM). The term “BHARATH MINES & MINERAL” clearly indicates that the material has come either from its lease or has been purchased. On verification it is found that permits for only 16368 MT of iron ore, for Belekeri, were issued, with BMM as party, during the above mentioned period. This indicates that the remaining 127566.88 MT of the iron ore was illicit.
3. COMPANY: TAURIAN IRON & STEEL CO PVT LTD.
Name of the lease from which iron ore was allegedly transported: SB Minerals, lease No.2515. As per the electronic data, a total of 10661.15 MT of iron ore was supplied, from 17 March 2009 to 29 March 2010, at Adani Enterprises Private Limited (AEL) port in Belekeri port, with the supplier name as TAURIAN IRON & STEEL CO PVT LTD (SVK). The term “SVK” clearly indicates that the material has come from “SVK MINE” belonging to lessee SB minerals with lease No.2515. On verification it is found that no permits for Belekeri were issued from the said lease, with TAURIAN IRON & STEEL CO PVT LTD. As party, during the above mentioned period. This indicates that the iron ore was illicit.
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4. Company : SRI LAXMI VENKATESWARA MINERALS
Name of the lease from which iron ore was allegedly transported:. HANUMAN MINE, Tumkur As per the electronic data, a total of 17,550.66 MT of iron ore was supplied, from 24 April 2010 to 8 May 2010, at Adani Enterprises Private Limited (AEL) plot in Belekeri port, with the supplier name as SRI LAXMI VENKATESWAR MINERALS (HANUMAN L/G). The term “HANUMAN” clearly indicates that the material has come from lease HANUMAN Mine with lease No.2220. On verification it is found that no permits for Belekeri were issued from the said lease, with SRI LAXMI VENKATESWAR MINERALS as party, during the above mentioned period. This indicates that the material was illicit.
5) Company: ILC
Name of the lease from which iron ore was allegedly transported: SB Minerals, Lease No.2515 As per the electronic data, a total of 58,653.65 MT of iron ore was supplied, from 1 April 2010 to 28 May 2010, at Adani Enterprises Private Limited (AEL) port in Belekeri port, with the supplier name as “I L C INDUSTRIES LTD (SVK)”. The term “SVK” clearly indicates that the material has come from “SVK Mine” belonging to lessee SB minerals with lease No. 2515. On verification it is found that no permits for Belekeri were issued from the said lease, with I L C INDUSTRIES LTD as party, during the above mentioned period. This indicates that the material was illicit.
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6. Company: Sathya Granites
Name of the lease from which iron ore was allegedly transported: V S LAD mine
As per the electronic data, a total of 10,710.12 MT of iron ore was supplied, from 23 April, 2010 to 30 May 2010, at Adani Enterprises Private Limited (AEL) plot in Belekeri port, with the supplier name as “SATHYA GRANITES (V.S.L)”. The term “V.S.L” clearly indicates that the material has come from V.S.LAD mine. On verification it is found that no permits for Belekeri were issued from the said lease, with SATHYA GRANITES as party, during the above mentioned period. This indicates that the iron ore was illicit. Further Satya granites were obtaining the permits and then surrendering it in a short period. This should be properly examined.
Quantification of Theft of Seized Quantity in Belekeri Port
On 20-03-2010 Iron ore was seized in Belekeri port on “as is where is basis” by Forest Department. The quantity seized as per the Port Conservator, Belekeri after obtaining information from four Port Land Lease holder/ Port user was 805991.083 MT (Annexure 4 of Chapter-2). Later on 2-6-2010 it was found that large quantity of iron ore seized was stolen and illegally exported. A theft case was registered at FIR No.189/2010 with Ankola police station which is under investigation by CID Bangalore.
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The party wise quantity of iron ore stored on 20-3- 2010 was provided by Port conservator as submitted by Four Port Lease holders. The Port was in operation and iron ore was being brought into the port and was getting exported. Meanwhile during the period part of the seized quantity was also exported. Belekeri Port being seasonal Port was closed in June month and thereafter state imposed a “ban on export” of iron ore.
The remaining quantity lying in Belekeri port was measured by expert team of officials from Department of Mines and Geology three times till date (by Lokayukta, by CID and by FD). As per the DMG official’s team report submitted to Forest Department Karwar Division on 22-5-2011 the remaining quantity is 272713.347 MT (Annexure 5 of Chapter-2). This quantity was calculated by multiplying Bulk Density (as measured in field) and volumetric measurement.
The quantity of seized against the parties/companies was compared party-wise/ company-wise with the quantity remaining in the port a comparative statement in Table-9 of Chapter- 2 of Dr. U.V.Singh’s report, is drawn, which indicates the quantity of iron ore stolen and exported prima facie. The difference column of Table-9 indicates the quantity of iron ore i.e. 6,10,810 MTs, had been stolen from iron ore seized on 20/3/2010.
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11) Dr. U.V. Singh’s Report has also given particulars of the quantities seized against the parties/companies in Table – 9, as per which the Port lease holders, Adani Enterprises and Sri Mallikarjun Shipping Limited, Salagaonkar Mining Industries Private Limited, Rajmahal Silks and other companies by themselves have indulged in illicit transportation of at least 610810.09 MTs of iron ore as on 20th March 2010.
12) Table 11 of Dr.U.V. Singh’s Report shows the export made since 20/3/2010 to May 2010. It is stated that the iron ore stolen out of the seized quantity has gone in the cargos as stated in Table-11 of Chapter-2 of Dr. U.V. Singh’s report. The exporters from serial number 1 to 67 of Table 11 are responsible for the export of iron ore, which was seized. To fix the theft, the quantity exported and to name the exporter the concern agencies should further investigate.
13) The Lokayukta police conducted a raid on 20/2/2010, as stated above, and have seized the computer and other documents from M/s. Adani Enterprises and Sri Mallikarjun Shipping Private Limited. The digital data were recovered from the Hard disks of the seized computers. A file was retrieved from the computer attached with an e-mail, named ‘cash a/c’. The file was sent from Accounts Section of Adani Enterprises, Belekeri on Friday, 28th March 2008 by Praveen Bajpai of Adani Enterprises to Samuel David, Mittal and Manoj Jha for getting approval of unaccounted payments made on behalf of Adani Enterprises, Belekeri port. The details of such payments have been reproduced at Annexure-6 of Chapter-2, which indicates that money has been regularly paid to Port authorities, Customs authorities, Police Department, Mines and Geology and even to MLAs/MPs. Major regulators of export activities are Customs
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Department and Port Department. Before a ship sets sail, Customs have to give ‘Let Export’ permission and Port Authorities are the facilitator and controller of the activities of Port handlers/users. Regular payments were made by the port handler and stevedore to various regulating authorities and officials. The money was paid in different modes as follows:-
(1) Payment of a ship-wise fixed amount. (2) Payment of an amount in proportion to quantity exported, (3) Payment of a month wise fixed amount, (4) Payment of lump sum amount at regular periods, (5) Payment of amounts once in a while.
14) The abstracts of payments alleged to have been made to various Departments is found from the document seized, the particulars of such payments are found in Annexure-6 to Chapter-2 of the Report submitted by Dr. U.V. Singh’s team to the undersigned.
15) In regard to Port Department, it is stated that the payments were made on Ship-wise basis and different rates were fixed for different level of officer. The details of payment made date-wise is listed in Annexure-6 of Chapter-2. Further, the general mode of payment were, PD – Port Director, 50,000/- per ship sailed; PO-Port Officer, 25,000/- per ship sailed; DPC-Deputy Port Conservator, 5,000/- per shipment and Port staff 5,500/- per ship sailed. In regard to Customs Department, it is stated that the payments to Custom officials was done on the basis of number of shipments, as well as, quantity exported. The details of payments made date wise is listed in Annexure-6 of Chapter-2 of Dr. U.V. Singh’s report. The general mode of payment to Customs Department was, before
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26/5/2006, 12,000/- per ship; between 26/5/2006 and 11/1/2008, 6,000/- per ship plus 0.50 per MT; and from 11/1/2008 and onwards, 0.50 per MT plus 1,00,000/- quarterly to AC-Custom.
16) In regard to Police, it is very interesting to note that Superintendent of Police receives 1,00,000/- bi-monthly; Addl. Superintendent of Police, receives 25,000/- monthly; Deputy Superintendent of Police receives 10,000/- monthly; Circle Inspector of Police receives 14,000/- monthly and Outpost receives 2,000/- monthly. Mines and Geology officials were paid in lump-sum amount at regular intervals. MLAs/MPs were paid once in a while in a lump-sum amount, particulars of which are at Annexure-6 of Chapter-2. The said report of Dr. U.V. Singh’s team also contains the payments made to CRZ, Weights and Measurement Department and other authorities.
17) The payment of bribe amounts to different departments has progressively increased from the year 2004-05 to 2007-08, which was 22,62,924 in the year 2004-05; 48,36,920/- in the year 2005-06; 66,31,144/- in the year 2006-07; 1,28,37,242/- in the year 2007-08. All these payments were not shown in the balance sheet of the company and were unaccounted and paid in cash. Dr. U.V. Singh’s team has recommended for further investigation for the veracity of the documents and the alleged involvement of the concerned departments and individuals in regard to payment of bribe and I recommend the same.
18) From the above discussion, in regard to export of illicit iron ore from Belekeri port only, the following inferences can be drawn.
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(1) The total export from Belekeri port in the year 2006-07 to 2010-11 is about 2,03,68,977 MTs.
(2) The total permits issued for the corresponding period to transport iron ore from various places to Belekeri port is about 1,26,30,808 MTs.
(3) The illegal export in the corresponding period is about 77,38,169 MTs.
(4) The illegal export for the year of 2009-10 is highest since 2006-07 and it is about 36,50,840 MTs i.e., almost more than double to the 2007-08
(5) The illegal export for the 2010-11 (two months) is record breaking and it is about 11,59,441 MTs.
(6) There is a theft of iron ore after seizure by Forest Department on 20/3/2010. The quantity stolen is about 6,10,810.09 MTs.
(7) Presently, iron ore stored at Belekeri port is approximately 2,72,713.35 MTs.
(8) The officials of Port department, Customs, Police, KSPCB, CRZ, Mines, Local politicians and others are involved in receiving the bribe money from M/s. Adani Enterprises. The money indicated in this chapter for bribe should be recovered and deposited into the State Exchequer. The criminal cases under the Prevention of Corruption Act should be filed against those who figured in the seized record of Adani Enterprises after proper identification and following the provisions of Law.
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(9) The Belekeri port is not having adequate infrastructure and also proper security hence the port should be closed till it is brought to the standard of ports managed by Central Government.
(10) The seized quantity available at Belekeri port of various suppliers/exporters should be forfeited to State Government after following the procedure available in Law.
(11) The Adani Enterprises has paid the bribes for getting undue favour for illegal exports. Action should be initiated against the company to cancel the lease granted at Belekeri port. The company should be black-listed and barred from participating in any future contract, grant or lease, etc by the Government.
(12) All the four lease holders/ port service providers i.e., M/s. Shree Mallikarjun Shipping Private Limited (SMSPL); M/s. Adani Enterprises Limited (AEL); M/s. Salgonkar Mining Industries Private Limited and M/s. Raj Mahal Silks have been found to be actively involved in large scale illegal exports of the iron ore causing huge loss to the Government. All these leases granted to the said four companies should be cancelled by following due provisions of law and other contemplated action should be taken against them.
(13) From the seized records (20/2/2010) it is found that forged permits were used to transport the illegal iron ore from various places in the State. Action should be initiated against the person involved under relevant provisions of law.
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(14) The involvement of transporters in transport of over load and using forged permit should be assessed and action should be taken under the Motor Vehicle Act and any other applicable law.
(15) Any other action contemplated under the relevant law should be taken.
19) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
20) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
21) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
22) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/-
(N.SANTOSH HEGDE) LOKAYUKTA
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3 ILLEGALITIES IN TRANSPORT OF IRON ORE THROUGH RAILWAY TO GOA
1) Dr. U.V. Singh’s team has examined the issue of transportation of iron ore to Goa by Railways and has found certain deficiencies. The said report states;
2) Goa has many iron ore mines. Iron ore is also exported through the ports in Goa. The two important ports in Goa through which iron ore is exported are Murmagao and Panaji. Exports through Murmagao port is the highest in the country and a substantial portion of this iron ore is sourced from Karnataka.
3) The report also states that in view of the fact that in Goa, iron ore of Karnataka origin is blended with iron ore of Goa origin, to improve its Fe content before it is exported. They have opined, that it is difficult to estimate quantity of Karnataka origin iron ore exports through Murmagao and Panaji ports of Goa. The report further noted that comparison of exports of iron ore of Karnataka origin and permits issued is carried out for all the ports, but for the two ports at Goa, it could not be done due to the following constraints:
(1) The data obtained from the Customs offices in Murmagao and Panaji had limitation of state of origin and completeness. It is found that the shipping bills of Murmagao was both manual as well as electronic and a large part of the manual shipping bills were not available. Moreover it was observed that the figures of export of iron ore of Karnataka origin, as depicted in shipping bill data of both the ports, were grossly underreported. This may be due to the fact that
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the major portion of blended iron ore may have been shown as of Goa origin. Hence the custom data provided cannot be used for comparison as it does not accurately reflect the quantum of iron ore of Karnataka origin exported from Goa.
(2) Iron ore is transported from Karnataka to Goa for both domestic consumption as well as exports from Goa. However the DMG permits issued does not clearly distinguish between domestic and export destinations. Since the destination mentioned in the permits is Goa, it is difficult to determine whether it was transported for domestic consumption or for exports. Therefore from the permit data it is not possible to determine the quantity of iron ore for which permits were issued for a port in Goa.
(3) Further, a few large exporters have mining leases in Karnataka as well as in Goa. Besides some exporters also have steel units in Goa. Because of this it is difficult to accurately identify from the party name in the permits, whether the issued permit is for export or for domestic consumption unit in Goa.
(4) Finally, the permits issued by DMG do not clearly indicate the mode of transport i.e. whether it is through railways or through road. It is observed that a major part of iron ore goes to Goa through goods train.
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4) The report further states that Railway is a major mode of transport of iron ore from Karnataka to Goa. The two major railway destinations in this regard are Tinaighat and Soverdem. The investigating team has obtained details of transportation of iron ore through railways to Tinaighat and Soverdem, from the railway authorities, which is reflected in Annexure-1 of Chapter 3 of Dr.U.V.Singh’s Report. From the said Annexure, information in regard to total quantity of iron ore transported by Railways from Karnataka to Goa during the period from April 2006 to March 2011 could be noticed. The report further observes that it has necessary information about month wise, consignor wise total quantity of iron ore transported by Railways from Karnataka to Goa via these two Railway Stations. This quantity includes iron ore transported for both exports and domestic consumption. The investigating team has also done the consignor wise comparison for 60 months’ period between 2006 and 2011. Table-1 of Chapter-3 Dr. U.V. Singh’s Report shows the “cases of discrepancies found in comparison of consignor wise month wise consignments unloaded at Tinaighat and Soveridem Railway Stations and Permits Issued to the Consignors as Party for the period. It also shows month wise permits issued to the consignor with Goa as destination. The information in this table identifies the months during which the quantity transported was in excess of the total permit quantity issued during the corresponding period. In view of the above, the investigating team has recommended the following for further action.
1. Comparison of the records of railway and the permits issued by the Mines Department, it is amply clear that there is no mechanism to verify the legality of iron ore received at Railway stations.
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Action should be taken by Railway Authorities to check and verify the documents with regard to iron ore transported through railways.
2. It is computed that prima facie approximately 45,59,365 MT of illicit iron ore was transported through Railway during the period 2006-07 to 2010- 11 as stated in Table-1 of Chapter-3 of Dr.U.V.Singh’s Report.
3. Action should be taken to recover the cost of the illegal iron ore transported by 40 consigners (Table-1 of Chapter-3 of Dr.U.V.Singh’s Report) with exemplary penalty after following due process of law.
5) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
6) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
7) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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4
CASES OF UNDER INVOICING OF IRON ORE EXPORT SALES 1. Cases of under invoicing in iron ore exports
(1) Data on exports of iron ore of Karnataka origin were obtained from Customs and Port authorities for the purpose of this enquiry. Customs and Port authority offices at various ports were physically visited by Dr. U.V.Singh’s team and discussions were held with the concerned officials. During discussions with officers and others, it was also found that there are cases of under-invoicing in iron ore exports sales. Hence it is found necessary to record the findings of the enquiry in regard to this subject in this chapter.
(2) The enquiry has revealed that some exporters exported iron ore at sale rates (US $/MT) that were considerably lower than the prevailing international rates or comparative rates at which other exporters were exporting iron ore during the period. It is also found that these under-invoicing have been made by some selected companies/firms and it is also found that some of the preferred overseas buyers are suspected to be “front companies”. The transactions of the exporters with these “front companies” are convoluted transactions devised for the purpose of evading paying taxes, duties etc. in India. These under invoices are being done largely on the basis of sham/make believe agreements with the “front companies” in order to camouflage their act of suppression of their real income.
(3) A list of suspected under-invoiced exports made during 2006-07 to 2010 is shown in Annexure 1 of chapter 4 of Dr. U.V.Singh’s Report. The list comprises export cases where the sale rate (US $ /MT) is significantly lower than the average
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of sale rates of all iron ore exports in that month from all ports. This list is not complete and there may be more such cases.
(4) There are 478 suspected cases of under-invoiced exports during the period 2006-2010. The total under-invoiced portion of sales in US $ is computed to be US $ 55,55,65,234. In rupee, this amount comes Rs. 2222,26,09,375/- @ Rs 40 per US $. Further it is found that in many cases exporters had a preferred consignee for under invoiced exports. The list of exporters and their preferred consignees for under-invoiced exports is given in Table 1 of Chapter 4 of Dr. U.V.Singh’s Report:
2. Evasion of Custom duty by exporters through under invoicing, typically during the period of ad-valorem based custom duty
(1) The Ad valorem (adv) customs duty for Iron Ore Fines was introduced from 2008-09. For the period from 13/06/2008 to 30/10/2008 the export duty was 15% Adv and the Cess was Re.1/- per MT. For the period from 07/11/2008 to 06/12/2008 the export duty was 8% Adv and the Cess was Re.1/- per MT. From 24/12/2009 onwards the export duty was 5% Adv and the Cess was Re.1/- per MT. Exports under- invoicing during the period ad valorem custom duty implies evasion of customs duty in addition to other evasions and violations. There are 174 suspected cases of custom duty evasion through export under invoicing of Iron Ore Fines, which is reflected in Annexure 2 to chapter 4 of Dr. U.V.Singh’s Report.
(2) Similarly, Ad valorem (adv) custom duty for iron ore lumps were introduced from 2008-09. For the period from
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13/06/2008 to 06/12/2008 the export duty was 15% Adv and the Cess was Re.1/- per MT. For the period from 07/12/2008 to 23/12/2008 the export duty was 5% Adv and the Cess was Re.1/- per MT. From 29/04/2010 onwards the export duty was 15% Adv and the Cess was Re.1/- per MT. There are 45 suspected cases of custom duty evasion through export under invoicing of Iron Ore Lumps, which is reflected in Annexure 3 to chapter 4 of Dr. U.V.Singh’s Report.
3. Exports by National Mineral Development Corporation (NMDC) (1) NMDC is a public sector undertaking under Government of India. NMDC exports high grade (65/63 Fe) iron ore. It is observed that in some exports, the NMDC sale rates are very low as compared to sale rates of other exporters and prevailing market rates, during the same period. As NMDC exports high grade iron ore, this observation is significant. Table-4 of Chapter 4 of Dr. U.V.Singh’s Report shows comparison of export sale rates of NMDC and average of sale rates of all iron ore exports during the month.
(2) All cases in Table-4 of Chapter-4 of Dr. U.V.Singh’s Report, Chapter pertaining to exports of high grade (65/63 Fe) iron ore. During the period, when the average rates of iron ore of all grades were fluctuating between 116 and 168 USD per MT, the rates charged by NMDC were between 50 and 63 USD per MT. It is computed that the amount earned by NMDC for these shipments is a mere 40% of the possible earnings, had NMDC exported the same quantity at the average of sale rates charged by other exporters. In effect, the PSU’s iron ore export realization is far less than the potential earnings.
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4. In the light of facts and circumstances stated above the following conclusions are drawn:
(1) There are 478 suspected cases of under invoiced export during the period 2006-07 and 2010. The total under invoiced portion of sales is about Rs. 2222,26,09,375/- (approximately Rs 2222 Crores) @ Rs 40 per US $. The concerned agencies should take note of this and take further needful action.
(2) Many exporters have preferred consignees for under invoiced exports. In several cases “front companies” of the exporters have acted as consignees. The concerned agencies should take note of this and take further needful action.
(3) There are 174 suspected cases of under invoicing of exports of iron ore fines and 45 suspected cases of under invoicing of exports of iron ore lumps during the periods of ad valorem customs duty regime. It should be seen in the light of evasion of custom duties. The concerned authorities should take note of this and take further needful action.
(4) During the enquiry it is observed that NMDC has exported iron ore at a rate much below the prevailing rates. It is further noted that NMDC has exported very high grade iron ore. Due to this the Public Sector Undertaking has incurred a huge loss. The concerned Ministry Government of India may take note of it and take further needful action.
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5) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
6) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and Government of India together, as well as, penal actions should also be resorted to, wherever necessary.
7) The State Government may request the Competent Authority in Govt. of India to take action under the relevant Law after having in-depth probe for parking the money outside the country.
8) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in the subject matter.
9) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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5
ISSUES WITH REGARD TO REALISATION OF EXPORT PROCEEDS THROUGH AUTHORISED DEALER BANKS
The Investigating Team headed by Dr.U.V. Singh, has noted the entire process of realization of export proceeds have numerous loopholes. In the process of realization of realization of export proceeds, following facts are noticed.
2) In every instance of export of iron ore, the exporter has to file a Shipping Bill with the Customs. The shipping bill contains details of iron ore quantity, provisional-Fe and moisture content, sale rate in US $, name and address of consignee, state of origin of material, destination port and country etc. It also contains details regarding Authorised Dealer bank (AD Bank) through which the exporter intends to realize the export proceeds.
3) In these exports, the exporter gives an undertaking that export proceeds as mentioned in the shipping bill shall be realized within a definite time limit. The rate in US $ declared in the shipping bill is based on Agreement/Letter of Credit between the exporter and the “buyer”, a copy of which is provided to Customs at the time of filing of shipping bill. On payment of custom duty as per the shipping bill, the Custom House issues a GR Form. A GR Form is a Foreign Exchange Control Form as per the provisions of Foreign Exchange Management Act (FEMA)
4) The exporter for the purpose of realization of export proceeds, submits the Export Bill in his AD Bank. The Export Bill comprises of Letter of Credit (LC), Invoice, Bill of Lading Shipping Bill/GR Form etc. The AD Bank verifies the Invoice against other documents viz.GR Form, Bill of Lading and the LC. In case of any variation, the AD Bank seeks an explanation from the exporter. In case the documents are in order the AD Bank remits the realized proceeds to the account of the exporter.
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5) AD Bank is supposed to file a Statement of Export Bills Negotiated/Sent for Collection during the fortnightly period, with Reserve Bank of India every fortnight. This statement is called ENC Statement and contains the amount in foreign currency along with Shipping Bill Number, Shipping Bill Date, IE Code of the Exporter, GR Form Number, Invoice Number, Port Code (for the Port through which export happened), AD Code of the Bank etc. AD Bank also files a Statement of Export Bills Outstanding (XOS Statement) giving details of all exports bills that have not been realized or partially realized (i.e. export bills outstanding) beyond 180 days.
6) According to the Report, earlier all foreign exchange realization including those from exports proceeds were regulated under the provisions of Foreign Exchange Regulation Act (FERA). Subsequently FERA provisions were relaxed through enactment of Foreign Exchange Management Act (FEMA) that included delegation of some of the functions of the RBI to the Authorized Dealer Banks. In addition, the paper forms based system has been replaced with an electronic reporting system to monitor realization of export proceeds.
7) As part of the enquiry Statements of Export Bills Negotiated/sent for collection during the fortnight i.e. ENC Statements reported to Reserve Bank of India (RBI) by all Authorized Dealer Banks during the period 2006 to 2010 were obtained from the RBI. However the matter of sharing data of “Statements of Export Bill Outstanding i.e. XOS Statements” with Karnataka Lokayukta was still under consideration by RBI till the time of writing this report. Hence, ENC data obtained from the RBI, iron ore exports data of Customs and information independently obtained from AD banks were used.
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8) During the examination of data and in the course of the enquiry, following issues with regard to realization of exports proceeds were found:
1. In the past the process of filing shipping bill was manual. The shipping bill form was in triplicate including a copy of the Shipping Bill/GR Form that was issued to the exporter. The shipping bill form had columns for recording observations or approvals by the AD bank and the Reserve Bank of India (RBI). The Exporter submitted his copy of the shipping bill/ GR Form to the AD Bank. The AD Bank verified the shipping bill with other documents like Invoice, Bill of Lading etc. On realization of export proceeds, the AD filled in the details of realization in the same form and submitted it to the RBI. This process of having a single paper document that moved from Customs to Exporter to AD Bank and finally to RBI ensured that export proceeds realization was in accordance with the exporter’s declaration in the shipping bill/GR Form.
However in the present system based on electronic reporting, Customs share the shipping bill data with RBI electronically. Similarly the AD banks files periodic reports with regard to realization of export proceeds against each shipping bill with the RBI electronically. RBI is supposed to collate and compare the two databases and monitor whether the realization of export proceeds is as per law. This is not happening effectively.
It is found that the fortnightly ENC statements filed by the AD banks are incomplete and full of errors. It is also found that collation and comparing of the two databases is not being done by the RBI. In the absence of verification by RBI, there is a possibility of cases of non realization and under
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realisation of export proceeds going undetected/ unnoticed/ ignored. This has encouraged tendencies of money laundering and parking of foreign exchange outside the country. As part of the examination, the shipping bill data was compared with ENC data for common SB No, SB Date and IEC No. It was found that records of only about 1000 Shipping bills out of over 5500 Shipping bills in the customs data were available in the RBI database. (Annexure 1 to Chapter 5 of Dr. U.V. Singh’s Report). This clearly substantiates the anomalies discussed above.
2. Non declaration of AD Bank Name and Account Number in the Shipping Bill
It is found that in many instances exporters did not declare their account number and name of their AD Bank in the shipping bill. Due to this it is difficult for the regulatory and enforcement agencies to track as to how the export proceeds for a particular shipment would be realized and lead to cases of non realization of export proceeds remaining undetected. This may further encourage tendencies of money laundering and parking of foreign exchange outside the country.
3. Non reporting /Erroneous reporting by AD Banks to RBI
In many instances it was found ENC statements are not filed with the RBI by some AD Banks e.g. State Bank of India Hospet (ENC Statement has not been filed since May 2009) and Canara Bank Bangalore. Axis Bank Bellary had been found to be selective in reporting ENC statements and it did not report realization in some instances. It also appears that there is no mechanism with the RBI to alert AD Bank in case
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of non filing of ENC statements leading to ineffective monitoring and tracking of realization of export proceeds.
The ENC report is prepared through data entry at the AD bank since there is no electronic interface between the banking application and the RBI system. It was observed that there were errors in data like shipping bill number, shipping bill date, port code etc. Because of these errors this data cannot be compared with the shipping bill data of Customs.
As explained earlier, AD Banks are required to report shipping bill wise export proceeds realization for effective monitoring. However it is found in many instances export proceeds realization against multiple shipping bills was reported against a single shipping bill only, vitiating the entire process of monitoring. This further confirms that monitoring of realization of export proceeds has proved to be ineffective.
4. Unlike other commodities, the value of iron ore shipments is prone to variation on account of changes in Fe/moisture content. It was found that banking applications at some banks did not take this factor into account. The bank application did not allow the value of shipment as per the GR Form to be different from the value of shipment as per the invoice. Hence the bank is filling the value of shipment as per the invoice under the field “Value of shipment as per the GR Form”. Because of this flaw in the software of the AD banks, XOS (Export Bills Outstanding) statements filed by the banks every 6 months with the RBI did not report cases of under realization and anomalies.
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5. Realization of export proceeds against a shipping bill through multiple banks
A Foreign Inward Remittance Certificate (FIRC) is required in case bank realization happens through a bank other than the AD Bank to which the exporter has submitted the GR Form. It was found that in some instances export proceeds against a shipping bill were realized through two different banks without an FIRC. In such cases the bank relied on self declaration of the exporter which is against banking regulations. This deviation is exploited by some exporters to park the export proceeds abroad.
A case in point pertains to an exporter M/s Obulapuram Mining Company Pvt Limited (IEC No 0702019313) with regard to their Shipping Bill Numbers 2863799, 2863798 and 8100617 respectively.
1. With regard to the Shipping Bill Number 2863799 it was found from the data provided that RBI that only around 2% of the FOB value has been realised till date. On enquiry the concerned AD bank (Axis Bank, Bellary) informed that, while submitting the invoice for realising the 2% of the FOB, the exporter had informed the bank that 98% of the FOB value has already been realised through the Bangalore Branch of Axis bank. However on examination the Bank found that the bills were not handled by it. (Letter of Bank at Annexure 2 and Covering letter of the Exporter at Annexure 3). A similar case has also been reported by the Bank with regard to the Shipping Bill No. 8100617.
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2. With regard to Shipping Bill Number 2863798 it has been informed by Axis Bank, Bellary that the export bill for realising the 2% of the FOB, was not paid and has been disposed of after self-right off. However in this case the customer (exporter) had informed the bank that 98% of the FOB value has already been realised through their Bangalore Branch. However on examination the Bank found that the bills were not handled by it. (Letter of Bank at Annexure 2 of Chapter-5 of Dr. U.V. Singh’s Report and Covering Letter of the Exporter at Annexure 4 of Chapter-5 of the said Report).
9) In the above process, the Investigating team found very many irregularities and contradictions, which is noted in the report at Chapter-5 of Dr. U.V. Singh. As there is a conflict in the versions of the AD bank and the Exporter, with regard to the realisation of the export proceeds through the bank, there is likelihood that approximately 12.1 Million dollars (Rs 47.8 crore in Rupee terms) of exports proceeds, against the said shipping bills, might not have been realised at all. This needs to be examined by the Department of Government of India.
10) Having noticed the deficiencies in the functioning of the institutions, which are managing the realization of money, which due to the exporter and consequently the benefit of foreign exchange and loss to the country, the investigating team has made the following suggestions:
1. It is noted that there are many flaws in the process of realisation of iron ore export proceeds.
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2. There is no effective system for monitoring and tracking of non realisation or under realisation of export proceeds by the Reserve Bank of India.
3. A detailed verification of export proceeds realisation against the Shipping Bills of all the iron ore exports during last 5 years needs to be undertaken by the Reserve Bank of India.
11) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
10) The State Government may request the Competent Authority in Govt. of India and Reserve Bank of India to take action under the relevant Law after having in-depth probe for parking the money outside the country.
11) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in the subject matter.
12) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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6
BENAMI ACCOUNTS OF SRI BHAKTHA MARKANDESHWARA MINERALS, HOSPET
M/s Sri Bhaktha Markandeshwara Minerals Hospet (SBMM) was established in the year 2008. It is an unregistered firm purportedly owned by a sole proprietor Sri K. Kashivishwanath (aged 35 years, the date of birth being 18/12/1975) son of K. Hanumanthappa, Weavers Cooperative Colony, Hospet, Bellary District. The records of registration i.e. TIN number have been collected from the Office of the Assistant Commissioner of Commercial Taxes, LVO 500, Hospet. The identity of the firm was noticed while examining the electronic records of Sri K. Mahesh of Hospet obtained from the Income Tax Department, Bangalore.
2) The bank accounts of this firm have been obtained from the Axis Bank, Hospet and Bellary, Lakshmivilas Bank, Hospet and Pragathi Grameena Bank, Hospet. On going through the bank accounts, it has been observed that crores of rupees have been deposited in banks and also withdrawn in cash from these accounts. Such illegal money transactions have been further trailed/proceed to accounts in bank of various persons/companies/firms and others. The total transaction of money in these accounts for a given period has been summarized by my investigating team as follows:
Sl. Name of the Date of Total debits Total credits Remarks No. Bank and opening of (Rs.) (Rs.) account No. Account 1 Lakshmivilas 23/04/2010 430547572.67 430589134.00 (as on Bank, Hospet 03/01/2011) A/c No. 029835800000 0307
2 Axis Bank, 16/06/2009 331930547.08 332259841.00 (as on Hospet A/c No. 29/01/2011) 618010200006 385
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3 Axis Bank, 23/11/2009 371926542.78 371929608.00 (as on Bellary A/c No. 29/01/2011) 909020039582 669 Total 1134404662.53 1134778583. 00
3) It is stated here that Sri K. Kashi Vishwanath when applied for getting TIN number from the Commercial Taxes Department in Karnataka, he had given a bank account No. SB 13670 of Pragathi Grameena Bank, Hospet (Annexure to Chapter-6 of Dr. U.V. Singh’s Report at Page 25-27. This account number has never been used for VAT payments. Entries reflected in the chart above have not been reflected in the records of the Commercial Taxes Department, which has totally failed to trace these accounts. Financial transaction of Pragathi Grameena Bank is given as hereunder. Total debits – Rs. 3,70,202.00 and Total credits – 3,70,750.00, i.e. as on 1/4/2011.
4) There is no record to show that the information about the above three accounts, i.e. (i) Lakshmivilas Bank, Hospet A/c No. 0298358000000307, (ii) Axis Bank, Hospet A/c No. 618010200006385 and (iii) Axis Bank, Bellary A/c No. 909020039582669, have been submitted to the Commercial Taxes Department as required under the law. The officials of the said department have not bothered to collect the bank accounts for verification and audit of the VAT. It is observed that there are hundreds of such cases which have come to the notice of my investigating team wherein all the bank accounts operated by the traders of iron ore are not reported to the Commercial Taxes Department. The information available with my investigating team, indicates that no serious attempts have been made by this department in cross-verifying the payment of
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VAT. There are plenty of cases wherein even at the time of registration TIN number, details of bank accounts have not been given. All trade transactions are done through other accounts. This is a serious issue and the department shall take immediate action to collect account numbers of all iron ore traders, mining lessees and also raising contractors, iron ore transporters, logistics providers, excavators etc. from the various banks mainly in Bellary, Hospet and surrounding districts all the branches including Bangalore.
5) Sri K. Kashi Vishwanath has deposed on oath on 6/4/2011 at the office of my investigating team. The deposition statement dated 6/4/2011 of Sri K. Kashi Vishwanath is enclosed (Annexure to Chapter-6 of Dr.U.V.Singh’s Report pages 28 to 31). As per his statement, he is an ordinary private employee working in Lakshmi Venkateshwara Steel Hardware Shop at Hospet since last one and a half years. Before this, he was running his own “Kirana shop”, a petty shop. He has stated that he is not sure whether his firm i.e. M/s Sri Bhaktha Markandeshwara Minerals Hospet (SBMM) is a registered firm or not, but he has taken the VAT Number. He states that he was a sole partner but since last three months, his cousin brother Sri K. Govindaraj son of Sri K. Nagaraju has also become the partner. This has not been informed to the Commercial Taxes Department and other connected departments. In reply to a question (Question No. 7) which is reproduced herein; he has stated that M/s SBMM owned by Sri K. Kashi Vishwanath has never entered into any iron ore trade. Sri K. Govindaraj may be a partner, not on record, but active functionary.
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“Qn. 7) What business M/s Sri Bhaktha Markandeshwara Minerals (BMM), Hospet has been carried out?
Ans: I am issuing the bills on the request of one Sri Ramesh S/o S. Gangappa, Hospet, by charging 5% of the iron ore value mentioned in the bill. Out of that 5%, 4% VAT is deposited to Government and 1% is kept by me as my commission. At the same time, I do not have idea of the iron ore trade against this bill. I do not know anything about the trading i.e. from where it is purchased or sold, etc. I do not have any idea about iron ore business. It is purchased or sold, etc. I do not have any idea about iron ore business. Since my earlier days I was working in Kirana Shop and once it went in loss, I switched over to working in M/s Lakshmivenkateshwara Steel Hardware Shop at Bellary Road, Hospet”
6) To another question, Sri K. Kashi Vishwanath has admitted that he has the knowledge of accounts being operated at three places in Hospet and Bellary, but he does not remember any of their account numbers. He does not have the idea of when the accounts were opened. He further submits that he does not have any idea of iron ore trade transit permits of Mines and Geology Department. His firm does not possess any iron ore stockyard and he further submits that he does not have any idea of transactions of crores of rupees from his accounts in various banks. But at the same time, he states that one person by name Sri Ramesh son of Sri Gangappa who lives in a village in Dharwad District has the knowledge. He states that he does not have any idea of his whereabouts. He denied that he has
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transported any iron ore to any port or place. To question No. 11, he admits that he does not have any idea of payments made to other companies/individuals etc. other than the iron ore bills issued by him. It is to note here that as per his admission, he states that he does only issue the bills and he does not deal with iron ore trade as such. He simply issues bills by collecting 5% of value of the bill which he issues in the name of his firm. It includes VAT charges and his commission, the VAT being 4% and commission being 1%. He categorically denies that he has never purchased and sold iron ore in the name of his firm, i.e. M/s SBMM. He also denied that any agreement was signed with the Krishnapatnam Port Company Limited (Annexure to Chapter-6 of Dr.U.V. Singh’s Report page 32 to 41). He denied that he has advanced any amount to the Krishnapatnam Port Company Limited. It is to state here that as per the bank account details, A/c No. 0298358000000307 of M/s SBMM in Lakshmivilas Bank, Hospet, an amount of Rs. 30.00 lakhs have been paid in favour of Krishnapatnam Port Company Limited on 31/5/2010. The CEO of this Company confirms this. An handling agreement claimed to be signed between Krishnapatnam Port Company Limited Vs M/s Sri Bhaktha Markandeshwara Minerals states that M/s SBMM is the company constituted under the Companies Act, 1956 having its Registered office at Door No. 93, 3rd cross, Weavers Colony, Hospet in Karnataka. It is stated here that as per TIN number, M/s Sri Bhaktha Markandeshwara Minerals is an unregistered firm. This indicates that the firm M/s Sri Bhaktha Markandeshwara Minerals is misused by others and managed by proxy members.
7) The office of the Lokayukta has approached the Income Tax Department, Government of India at Bangalore to exchange
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the information/documents mainly the documents/electronic devices seized by them during the various raids conducted in 2010. After having a thorough discussion and correspondence, a pen drive was provided to this office having the contents seized from the premises of Sri Karapudi Mahesh (K. Mahesh). Printout of the said pen drive was taken and examined. During the perusal of the records, Table-1 of Chapter-6 of Dr. U.V. Singh’s report has been traced and it is a part of hundreds of other pages available in pen drive. This page along with other pages have been cross checked and verified from the printouts available with the Income Tax Department.
8) The Account No. 2669 and cheque Numbers appearing in the said table issued out of this account was verified and found that this account was operated in favour of M/s SBMM. The financial transactions about the cheque numbers have been cross verified with this account and it is found that most of the cheque numbers and corresponding amounts are matching. Copy of the said bank Account No. 909020039582669 of M/s SBMM is enclosed (Annexure to Chapter 6 Dr.U.V. Singh’s Report pages 42 – 46).
9) Similarly, Table-1 and 3 of Chapter-6 of Dr. U.V. Singh’s Report gives the details of Account No. 267010200016667 pertaining to Sri Lakshmi Venkateshwara Minerals, Hospet in Axis Bank, Bellary. Further, the entries of statement of Account No. 267010200016667 of Axis Bank, Bellary pertaining to Sri Lakshmi Venkateshwara Minerals, Hospet, Door No. 1047, 25th ward, Akashavani Road, Hospet – 583201, Karnataka, have also been verified and found matching. The bank account No. 16667 of M/s SLVM is enclosed (Annexure to Chapter 6 of Dr. U.V. Singh’s Report at Pages 47 to 51).
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10) Rest of the entries are cash transactions in Table-1 of Chapter-6 of Dr. U.V.Singh Report, it should also be taken note from table-1 that amount is paid at the rate of Rs.100/- per MT (27/12/09 and 06/01/2010). The amount also is credited out of illegal ore from Chitradurga. On verification of the entries in the Table-1 referred above with respect to account of Axis Bank, Bellary mentioned above pertaining to M/s SBMM, the cheque numbers and respective amounts are found matching and there is no doubt whatsoever left that the information in the Table-1 is genuine and can be taken as evidence for any proceedings. Taking Table-1 into consideration, the amount drawn as cash from both the accounts (2669 of M/s SBMM and 16667 of M/s SLVM) referred in Chapter-6, Dr.U.V. Singh’s Report shows that it has reached to "Sri G.J. Reddy Sir” as stated in the heading of Table-1. The risk amount withdrawn from the bank accounts and also cash paid finally reaches the same person as amount payable to the overall protection provided for illegal iron ore trade and transportation. This matter requires further in-depth investigation by a Competent authority.
11) The account No. 0298358000000307 of M/s SBMM in Lakshmivilas Bank, Hospet has been examined in respect of certain credits and debits and onward proceeds to other accounts. In one of the transactions taken place on 31/5/2010 an amount of Rs.12,50,00,000/- was deposited in favour of Associated Mining Company in account No. 31000313003 of State Bank of India, Main Branch, Bellary (Annexure to Chapter-6 of Dr.U.V. Singh’s Report at page 53 to 97). This account is a joint account of Managing Partners Sri G. Janardhana Reddy and Mrs. G. Lakshmi Aruna of Associated Mining Company (AMC), Bellary. Further, there is a credit of Rs. 5.00 crores on 31/5/2010 in the account of M/s SBMM
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(A/c No. 0298358000000307) from the account No. 298358000000013 of Sri Jambunatheshwara Minerals, Hospet in Lakshmivilas Bank, Hospet (Annexure to chapter 6 of Dr.U.V. Singh’s Report at pages 98-100). Hence, the money form A/c No. 0013 proceeds to the account of M/s Associated Mining Company (M/s AMC), at SBI, Bellary. It is to be noted here that M/s Jambunatheshwara Minerals is involved in illegal trade of iron ore from Hospet-Sandur-Bellary regions. With the proceeds of money it is clear that large amount of money was credited to the account of M/s AMC. from the said account and others. Some of the details of credits and debits of the account No. 3003 of SBI are stated in the chapter pertaining to M/s AMC. There are other dubious transactions in the said account which requires further investigation.
12) The form VAT 1 [see Rule 4(1)] for registration under the Karnataka Value Added Tax Act 2003, the AMC’s Managing Partners Mrs. Gali Lakshmi Aruna and partners have provided the bank details of the company for VAT purpose (Annexure to Chapter 6 of Dr.U.V. Singh’s Report at page 104-107). The bank in this respect is Canara Bank Account No. CA 179. There is no mention regarding the account of State Bank of India, Bellary (A/c No. 31000313003) which is having the credits of large amount of money transactions of the M/s AMC. The payment of VAT in this regard shall be further investigated by the Competent Authority (Commercial Taxes Department).
13) Bulk permits were issued to M/s AMC by the Deputy Director, Department of Mines and Geology, Hospet for transportation of iron ore during the years 2009 to 2010. The name of the party is included in the MDP. It is noted that there is no permit issued in favour of M/s Sri Bhaktha
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Markandeshwara Minerals Hospet (SBMM) and M/s Sri Jambunatheswara Minerals. It is pertinent to note that Sri K. Kashi Vishwanatha who has deposed under oath has categorically stated that he has never had iron ore purchase and sale. On perusal of all the three accounts of M/s SBMM, it is found that lot of cash transaction has taken place in the form of credits and debits. A large part of these cash deposits might have come from risk amount collected for illegal iron ore transportation by various traders to various destinations from Hospet, Sandur, Chitradurga, Gadag, Amingarh and other places.
14) With the foregone paras and the records examined in this office, it is stated that the three accounts, i.e. (i) Lakshmivilas Bank, Hospet A/c No. 0298358000000307, (ii) Axis Bank, Hospet A/c No. 618010200006385 and (iii) Axis Bank, Bellary A/c No. 909020039582669, of M/s SBMM are the “benami” accounts which are operated to transfer the ill-gotten money collected from various sources, such as, illegal iron ore trade, risk amount and others from one head to other. The signatures of Sri K. Kashi Vishwanath found on the cheques used for self withdrawals from Axis Bank, Bellary do not match with his signature done during deposition on oath on 6/4/2011. These accounts are proxy used for illegal transactions.
15) The computerized data seized from the premises of Sri Karapudi Mahesh by the Income Tax Department, which data is obtained by Lokayukta Investigating body has been examined and verified from the bank accounts of M/s SBMM and found matching. The details are at Table 4 to 11 of Chapter-6 of Dr.U.V. Singh’s Report. The contents in the tables pertain to OMC material and Bellary risk amount. After crediting the
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money through cheques and cash in the bank accounts, the same is withdrawn in cash through self drawn cheques (the A/c No. 2669 of M/s SBMM of Axis Bank, Bellary and the A/c No. 16667 of M/s SLVM of Axis Bank, Bellary meant for OMC (CMO) material) are shown at Table - 4 and Table – 5 of Chapter-6 of Dr.U.V. Singh’s Report.
16) That apart, the account details is maintained by Sri K. Mahesh and his associates indicate that the accounts of M/s SBMM are virtually operated by Sri K. Mahesh for transactions of illegal money received from illegal transactions from various parties.
17) While examining the Account No. 0298358000000307 of Lakshmivilas Bank, Hospet of M/s SBMM, an amount of Rs.11,19,29,656/- have been credited in cash and the same is proceed to debit in the account of M/s Jambunatheshwara Minerals on 5/6/2010. Further, an amount of Rs.10,76,24,670/- has been self withdrawn by Jambunathe- shwara Minerals on 5/6/2010. In this account Rs.38,74,82,493/- has been debited and Rs. 38,75,21,734/- has been credited (from 18/01/2010 to 10/02/2011). There is a lot of cash transaction in this account in the form of credits and debits. Whether such transactions had been lawfully permitted and reported by the banks to RBI shall be investigated. This account of M/s Jambunatheshwara Minerals also seems to be a benami account. The following firms/ companies/ individuals funds are debited and credited in this account. 1) S.B. Logistics 2) Srinivas Minerals 3) Dream Logistics 4) ILC Industries Ltd Petroleum 5) T.V. Sundaram Iyengar & Sons
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6) Sri Srinivas Minerals 7) BMM Ispat Ltd 8) Manasi Resources 9) Shree Bhakta Markandeshwara Minerals 10) Sri Lakshmi Venkateshwara Minerals
18) From the examination of these bank accounts, it is seen that M/s SBMM had monetary transactions with many companies. A list of companies who had credited money into the accounts of M/s SBMM and companies under whose name the money was debited is shown at Table – 12 and 13 (Annexure to Chapter-6 of Dr.U.V. Singh’s Report). It is to be noted that most of these companies figure in the records seized by the Income Tax Department and on examination, they have been found to be involved in the business of illicit iron ore, as detailed in chapters under the Section “Examination of Records seized by Income Tax Department during their searches” and “Specific Cases”. M/s Havinahal Mines and Minerals, a private limited company is a front company of the mining lease M/s Hind Traders.
19) From the facts as stated above and related records, the following conclusions are drawn for further action;
(1) The bank accounts namely, (i) A/c No. 0298358000000307 of Lakshmivilas Bank, Hospet, (ii) A/c No. 618010200006385 of Axis Bank, Hospet and (iii) A/c No. 909020039582669 of Axis Bank, Bellary, pertaining to M/s Sri Bhaktha Markandeshwara Minerals (M/s SBMM) and A/c No. 298358000000013 of Lakshmivilas Bank, Hospet pertaining to Sri Jambunathesh- wara Minerals, Hospet are the benami accounts operated on proxy.
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(2) The money from the above said accounts proceeds to “G.J. Reddy Sir” (Bellary Risk Amount and others as per the electronic data record of IT department) and also to Associated Mining Company (as per bank accounts details) should be forfeited to State Government with other legal actions.
(3) Sri K. Kashi Vishwanath is an ordinary employee and does not operate iron ore trade instead he issues broachers on behalf of his firm which are illegal and unlawful.
(4) Associated Mining Company did not provide the account details to Commercial Taxes Department i.e. details of account No. 31000313003 of State Bank of India, Main Branch, Bellary in violation of Karnataka Value Added Tax Act, 2003.
(5) The money transactions of the accounts of M/s Sri Bhaktha Markandeshwara Minerals Hospet (SBMM) are not in the knowledge of Sri K. Kashi Vishwanath.
(6) All the money which is accounted in the above said accounts should be recovered and forfeited in favour of State Government after following due courses of Law.
(7) Offence cases against the all concerned including banks should be booked under the relevant Acts and Rules including Benami Act.
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20) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
21) Action should also be taken against all those whose names are stated in this Chapter, who are involved in the illegal mining and iron ore trade under the relevant provisions of Law, with recovery of losses to the State Government, as well as, penal actions should also be resorted to, wherever necessary.
22) The State Government may request the Competent Authority in Govt. of India/ Reserve Bank of India to take action under the relevant Law for cash flow in various accounts.
23) In view of the misconduct of Sri G.Janardhana Reddy, Minister, noted in this Chapter, I recommend to the Competent Authority for his removal from the Cabinet.
24) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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7
ASSOCIATED MINING COMPANY- A POOL OF ILLEGALITIES
The above is the title of the chapter given by Dr. U.V. Singh while submitting his report to me. After examining the files pertaining to M/s Associated Mining Company, Bellary, I find the title “Pool of Illegalities” very apt and appropriate. The facts of this case picturise how people in power could misuse their offices and manipulate the law and executive to their advantage.
2) A mining lease ML No. 2434 (old 625) was granted to M/s. Associated Mining Company, Bellary for a period of 30 years w.e.f. 02/03/1966 for winning of iron ore over an area of 16.9 hectares in Venkatagiri village of Sandur taluk, Ramghad forest block (Ramanmalai block). The lease period expired on 01/03/1996. As required in law, the lessee had applied for renewal of lease on 27/7/1994 seeking a further period of thirty years. Renewal was accorded by the State Government on 8/12/2003, with retrospective effect from 24/03/2000 for an area of 10.12 hectares for 10 years only. As per this renewal, the lease period expired on 23/03/2010. In this background, the question arises whether the period between 1/3/1996 to 24/3/2000 is covered or not under the Mines and Minerals (Regulation & Development) Act, 1957 (MMRD Act), as well as Forest (Conservation) Act 1980 (FCA). Hence, a question arises here whether it can be considered as a renewal when there is a gap of period from 1996 to 2000 and there was no continuity during this period of lease. According to Dr. Singh, this type of renewal has no precedent.
3) On perusal of the file of the office of the Secretary, Mines, the concerned Under Secretary has submitted a note for renewal
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of lease from the 1996 to 2006 for a period of 10 years. This has been endorsed by the Secretary, Mines, but, the then Hon’ble Minister of Mines Sri. V. Muniyappa had overruled the noting and approved for 10 years corresponding to the approval given under the FCA 1980. This has resulted in a gap of period i.e. from 1996 to 2000. In such circumstances, according to law, the approval should be considered as fresh lease grant. The question arises here whether the renewal from 24/03/2000 to 23/03/2010 leaving a gap of 4 years is in accordance with the Mines and Minerals Law or otherwise. Dr. Singh noted in his report that this is a first of its kind case wherein renewal is granted for ten years lease which had a gap of 4 years and there was no continuity of lease during that period. Hence, it is in violation of Mines and Minerals (Regulation & Development) Act 1957. (Annexure–1 of Chapter - 7 of Dr. U.V.Singh’s Report at pages 1-17). In my opinion, this has to be examined and if found necessary, renewal of ten years w.e.f. 24/03/2000 should be treated as unlawful renewal. It is also pertinent to mention here that the then Director of Mines and Geology Department, had written a letter to the Chief Controller of Mines, Nagpur on 05/08/2010 stating wrong facts. The details of the same are found in the report of Dr. Singh. Dr. Singh also notes that as per the contents of para 6 of the said checklist the total reserve in the leased area is about 9 million tons (as per the data of 2008-09). If the extraction is allowed at 1.00 million ton per annum, then it would last only for another 8 years, since one million ton must have been extracted already. Hence the life of the lease would not last for more than 8 years, as stated by Dr. Singh. It is a matter of great concern. Dr. Singh has strongly relied on Rule 37, 46, 48 and 50 of Mineral Concession Rules (MCR) 1960, which prohibits transfer of lease and assignment.
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4) M/s. Associated Mining Company is a registered partnership firm and during the course of time, the partners of the firm changed within the family of lessee but finally the firm has been brought under the control of total outsiders. It is interesting to note the manner in which the change in management has taken place since 2006.
Table-1 Admission and Retirement of Partners in M/s. AMC
Sl. Date of Name of the Partners Admission Retired No. Admission deed (reconstituti on partnership) 1 01-04-2006 Smt. K. M. K.M. Vishwanath, K.M. Sujatha Parvathamma Master. Prabu, Smt. K.M. Sujatha K.M. Ashish Sujan Kolumath Prabhu (Mrs. K.M Savitha Kum K. M Mr. Sujan Kolumath Basavaraj) Sanjana Kum. K.M. Sanjana 2 31-03-2007 Smt. K.M. Parvathamma Mr. K.M. Vishwanath Master. K.M. Ashish, S/o K.M Basavaraj (Natural Guardian Mrs. K.M Savitha Basavaraj) 3 15-07-2009 Smt. K.M. Master. K.M. Parvathamma Ashish, S/o K.M Mr. K.M. Vishwanath Basavaraj (Natural Guardian Mrs. K.M Savitha Basavaraj) 4 31-07-2009 Smt. K.M. Mr. G. Janardhan Parvathamma Reddy Mr. K.M. Vishwanath Smt. G. Lakhsmi Mr. G. Janardhan Aruna Reddy Smt. G. Lakhsmi Aruna 5 01-08-2009 Mr. G. Janardhan Smt. K.M. Reddy Parvathamma Smt. G. Lakhsmi Mr. K.M. Aruna Vishwanath
5) From the above, it is seen from 1/8/2009, there is complete replacement of original partners and finally there
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remains only two partners i.e. Mr. G. Janardhan Reddy and Smt. G. Lakshmi Aruna in M/s. Associated Mining Company. After going through the various documents available in the file of the Director, Mines and Geology, Dr. Singh has arrived at the conclusion that the management of M/s. Associated Mining Company has been completely changed from 1/8/2009. He has also noted that no approval from the State Government or Central Government under Rule 37, 46 and 48 was obtained in this regard. Hence, he has opined that there is violation of Rule 37, 46 and 48 of the Mineral Concession Rules (MCR) 1960. If that be the position, all the mining activities including extraction and dispatch of mineral carried out since 1/8/2009 onwards are unlawful and should be treated as illegal.
6) It is also seen that after the new management took over, separate account has been opened in favour of M/s Associated Mining Company in the State Bank of India, Bellary, which indicates that the firm itself has turned out to be a totally a new firm. Further, the firm has changed its office from the old address to a new office at Bellary. After perusal of the details of MDP for the year of 2009-10, which is found at Table – 2 of Dr. Singh’s report, Dr. Singh has come to the conclusion that stock verification certificates issued by the officials named in Table – 3 of his report are either in connivance or under pressure and are not genuine. He also expresses his doubt as to whether such large quantity of iron ore could be produced in a gap of 5 to 10 days in a mine of 10.12 hectares size where large area is in fact forest. After perusing stock verification certificates given by Engineers of Dy. Director of Mines, Hospet office, Dr. Singh has noted that total quantity of 6,28,032 MT have been dispatched from the mining head from 21/1/2010 to 23/3/2010. Taking 16 MT as the load of a single rear axel
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recovery vehicle, Dr. Singh concludes that about 39,252 trucks would have to be used to transport the iron ore from mine head to various destinations to lift the said quantity.
7) It is further stated here that the quantity of 3,20,000 MT permits have been issued from 18/03/2010 to 22/03/2010 by the Deputy Conservator of Forests, Bellary, which is humanly not possible to dispatch such a large quantity in such a short period.
8) Dr. Singh’s team has verified the royalty paid against the quantity mentioned above. It was found that the demand drafts were made through the bank accounts of M/s. Associated Mining Company from the SBI new account. This indicates that the mining has been carried out by the new managing partners i.e. Mr. G. Janardhana Reddy, Mrs. Lakshmi Aruna. It is interesting to note that every partner other than of Mr. G. Janardhan Reddy and Mrs. Lakshmi Aruna had retired by 1st August 2009. Its former Managing Partners Smt K. Parvathamma and Mr. K.M. Vishwanath sends a request to Director, Mines and Geology to issue permission to transport iron ore from the ML No. 2434 in favour of Mr. G. Janardhan Reddy and Mrs. Lakshmi Aruna who are by then sole partners of the mine. This has done by a letter dated 26/12/2009, if really AMC was the old company continuing, then one does not find the reason why retired persons should send such letter to the Director of Mines and Geology. It is interesting to note the reaction of the Director of Mines and Geology which is found in a memo issued by him to the Dy. Director of Mines and Geology, Hospet on 6/1/2010 in which he directs the Dy. Director to issue the MDPs to the company stating that only the partners of the company are changed and style and function of the
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company remains unchanged, while in reality, the entire management of the AMC has been taken over by a process contrary to MMRD Act. The relevant clauses of the retirement deed which is available in the report of Dr. Singh clearly indicates that in reality, it is not a retirement from partnership, but, it is an outright sale of the firm. The Director of Mines and Geology was not a Competent Authority to issue such direction to the Dy. Director, without taking the prior permission of the State Government or Central Government. Dr. Singh notes in his report that the rights created and conferred on the new Managing Partners is contrary to the lease agreement signed by the old Managing Partners. In support of his argument that such kind of transfers are not contemplated under the MMDR Act or the Rules, he relies on the judgment of Hon’ble Supreme Court reported in 1996 (5) Suppl. SCR 692, in the case of M/s Victoria Granites v. P. Rama Rao & Ors. In almost similar facts, the Hon’ble Supreme Court has held that such a transaction is a facade of compliance of law, and it is only a subterfuge to comply with the law. The Hon’ble Supreme Court also doubted on the facts of that case that there are doubts with regard to the very constitution and genuineness of the partnership. It also observed that “suffice it to state that the entire transaction is smacked of bonafides and would defeat the constitutional objectives”. Based on the above enunciation of law, I am of the opinion that retirement and induction of various partners knowing that the entire firm is going to be transferred to Sri G. Janardhana Reddy and Mrs. G. Lakshmi Aruna, was an attempt to get over the prohibition of transfer in MMDR Act and MCR.
9) It is interesting to note how this company was able to manage its mining activities after the last reconstitution of the
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firm on 1/8/2009. From 1/8/2009 till January 2010, this company did not take the necessary permits. The issuance of permits taken only in January 2010, the details of which is found at Table – 4 in Dr. Singh’s report. The contents of which have been obtained by Dr. Singh from the Foresters concerned.
10) It is to be noted here that after the new partners took over, they got a new VAT account by giving the concerned VAT officer, the new address of the firm. While obtaining new VAT registration, bank details of old account was given by the firm (Canara Bank CA A/c No. 179, Bellary). On verification, it is found that this account has not been operated since 30th August, 2009. Thus, wrong information was submitted for the purpose of payment of VAT by the new managing partners. It is to be noted that by then the new partners had opened new account in State Bank of India, Bellary and all the business transactions was carried out through this account. The Commercial Tax Department has not bothered to find out the facts in the matter. I wonder how, without having the appropriate bank account, the payment was verified/reconciled by the Commercial Tax Department. During the course of discussion, one cannot forget that by the time the husband and wife became the sole partners of M/s AMC, the husband had become a Minister in the Karnataka Government, that too Minister in charge of Bellary District. It is also interesting to note that new Managing Partners opened a joint account in the State Bank of India and on perusal of the said account, it is noted that two demand drafts dated 22/5/2010 for Rs.96,80,000.00 and Rs.87,44,000.00, have been paid from this account in favour of Dy. Director of Mines, Hospet, for payment of royalty to issue MDP from the mining lease of Sri B.R. Yogendranath Singh, ML. No. 2186. On receiving the said
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payment, the Dy. Director has issued MDP for 1,00,000 MT to transport of iron ore from the said lease ML. No. 2186 to JSW Steels Pvt. Ltd in the month of May 2010. It is to state here that there was no stock of iron ore in the said mine. In such circumstances the question arises from where the ore has been transported and supplied to JSW Steels and why the amount was paid to issue demand drafts for the ML No. 2186 of BRY from the account of M/s Associated Mining Company. It is also very interesting to note that how transactions have taken place involving M/s AMC. It is seen that an amount of Rs. 35.00 crores have been credited from the Minerals Embassy (SBM 1047) in the account of M/s. Associated Mining Company A/c no. 3003 of SBI Bellary on 11/05/2010 and 14/05/2010.
11) It is noted that Mineral Embassy is a front company/firm of ILC. There is also another credit of Rs. 14.00 crores from Janadevi Minerals on 31/05/2010 and 19/07/2010 in the account of AMC. There is no permits (MDP) issued as a party/purchaser from AMC. The Janadevi Minerals is also a front company/firm of ILC. The money has been credited to this account (SBI 3003 of AMC) through circuitous route. Likewise, Rs. 34.15 crores have been credited from the account of Lakshmi Aruna Minerals (HDFC) on 25/06/2010, 31/07/2010, 20/08/2010 and 30/08/2010 in the account of AMC (SBI 3003). Mrs. G. Lakshmi Aruna is the Managing Partner in both firms. It is to state here that royalty has been paid from the SBI, Bellary A/c no. 3003 for issuance of permits from the BRY Mines ML No. 2186. There is another credit of Rs. 3.00 crores on 07/05/2010 from HDFC Bank account of Eagle Traders and Logistics. It is to further state that these credits are not the final figures and only indicative. There are more transactions of this kind in this account. This account (SBI
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31000313003 of AMC) has been opened in December 2009 and there is a credit of Rs. 270,60,93,762.00 (Rupees Two hundred seventy crores sixty lakhs ninety three thousand seven hundred and sixty two) and debit of Rs.269,15,73,602.00 (Rupees Two hundred sixty nine crores fifteen lakhs seventy three thousand six hundred and two). There are debits from these accounts (SBI 3003) to Sri Bhakta Markandeshwara Minerals (SBMM) (Axis 2669), Divakar Minerals, JJ Impex, Shantha Lakshmi Jairam, Brahamini Industries, Vijay Mining Infrastructure and many others. The trail of huge amount in this account (SBI 3003) is allegedly linked with the illicit removal of ore from various mines which is separately dealt in this report. These transactions do require further investigation from a Competent Agency.
12) As per the information of Deputy Director, Mines, Hospet a bulk permit no. 143186 dated 16/01/2010 for a quantity of 24,992 MT fines have been issued to transport to JSW Torangallu as destination. Against this bulk permit 45107.55 MT have been supplied till 15th Feb. 2010. Hence there is an excess supply of 20,115.55 MT. This excess supply is due to over loading or multiple trips against a single trip sheet or Form No. 27. All these are violation of MMRD Act, MCR and Karnataka Forest Rules. The excess mineral supplied is the property of the State. Hence, it amounts to theft. It is further noted that bulk permits as stated in table 6 of Dr. Singh’s report on this subject, for quantity of 184992 MT of iron ore fines have been issued from AMC to JSW, Torangallu from 16/01/2010 to 19/03/2010. The lease (ML No. 2434) period has been expired on 23/03/2010. For all practical purposes under the Law no material could have been transported from 24/03/2010 onwards. Dr. Singh had obtained the details of receipts of iron
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ore at JSW, Torangallu from the CEO, JSW. The details are given in table 7. As per the said table, 4,88,565 MT has been supplied to JSW, Torangallu by Associated Mining Company from Jan 2010 to July 2010. It is to note here that since the lease expired on 23/03/2010, the validity of the permits also expiries accordingly. Hence iron ore supplied from 24/03/2010 is illegal and unlawful. The difference of 303573 MT of iron ore supplied after 24/03/2010 to JSW by Associated Mining Company is illegal. AMC was not issued with any permits by the Deputy Director, Mines, Hospet. Presuming that the ore is not transported from AMC lease then question arises from where the ore has been supplied. It is further stated that from January 2010 to 24th March 2010 the quantity of 131621.27 MT iron ore has only been supplied as per the data of the JSW as against the 184992 MT. It is to note here that on 23/02/2010 there were three bulk permits issued for a quantity of 24,000 x 2 and 12,000 by the Deputy Director, Mines, Hospet. In fact, issue of more than one permit for the same destination and for the same party is unjustified and could lead to misuse of the same. In a similar manner permits for 80,000 MT have been issued on 19/03/2010 of the denomination of 40,000 MT each. It is pertinent to mention here that the forest permits (Form no. 27) have been ordered to issue for the said quantity on 22/03/2010 by the Deputy Conservator of Forests, Bellary vide his order dated 22/03/2010 to supply the iron ore within 2 days i.e. 22/03/2010 and 23/03/2010 which is practically and physically impossible to transport 80,000 MT in two days through a single approach road. By issuing such an order without application of mind, the DCF has shown undue favour and facilitated for illegal mining and transportation either from the same mine or somewhere else beyond the expiry period of lease. It is further stated that permits were also issued for
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different destinations like Krishnapatnam, Bevanahalli, Belekeri in the same period.
Table-10: Issue of Form no. 27 and collection of FDT (pending of FDT)
Sl. Date Quanti Destination FDT paid FDT pending No. ty MT Rs. Rs. 1 25-01-10 24992 JSW Steel Ltd 00 23846543 2 23-02-10 20000 --do-- 3024000 23446543 3 02-03-10 60000 --do-- 756000 2268000 4 04-03-10 80000 Belekeri 3024000 5 06-03-10 73040 --do-- 3023856 6 10-03-10 50000 Bevanahalli 2010000 Not paid for 50000 MT 7 18-03-10 80000 Belekeri 93500 3312000 8 20-03-10 80000 Bevanahalli 00 Pending 9 20-03-10 80000 JSW Steels, 00 Pending Tgl 10 22-03-10 80000 Bevanahalli, 00 19191600 Krishnapatna m Total 62803 2
13) After the bulk permits are issued by Deputy Director, Mines, the Deputy Conservator of Forests, issues the Form no. 27 as transit permit after collecting permissible Forest Development Tax (FDT). From the Table-10 above it is noted that the Deputy Conservator of Forests, Bellary has issued orders to issue Form no. 27 on various dates for the quantity of 6,28,032 MT without collecting Forest Development Tax (FDT) many times and finally a balance of Rs. 1,91,91,600.00 is due against the lessee and hence, it is in violation of the Karnataka Forest Act and misuse of powers conferred on him as per rules. Form No. 27 (transit permit) can be given only after FDT is collected. Knowing fully well that the lease period is getting over on 23/3/2010, it is undue favour shown by DCF to M/s AMC.
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Reasons for this could be many. Greed and political pressure are some of them. In the above said Table-10, it is noted that from 18/03/2010 to 22/03/2010, the said officer has issued orders to issue Form 27 for 3,20,000 MT iron ore to transport within a span of 6 days including 18/03/2010. The stock certificate issued by Engineers of Mines Department and ACF, Forest Department is under the cloud of suspicion. Because, to transport such huge quantity, it is physically not possible through a single road. It is shocking to note that how the then DCF Sri S. Muthaiah has issued orders by keeping in pendency the recovery of FDT to a tune of Rs. 1,91,91,600.00, as per his own calculation. The calculation of FDT should be verified with regard to whether fixing of rate has been done as per the norms. Non recovery of such a huge amount is direct loss to the State Government. It has been confirmed over telephone from the Deputy Conservator of Forests, Bellary that this amount has not been recovered so far. Presently, the lease is not in operation. The Central Empowered Committee has taken up survey of the leased area. It may be relevant to mention at this stage that Sri S. Muthaiah, who is an officer of the Forest Department was in Bellary when the Government changed the entire officers including said Muthaiah were sent out of Bellary; but, the Government had to bring all those officers back to Bellary including Sri Muthaiah. The said Muthaiah had to be transferred for various reasons from his post in Forest Department, but his proximity to the Minister in charge of the District is such that he was retained as C.E.O. of the Z.P. at Bellary.
14) It is pertinent to state here that misuse of Form no. 27 (transit permits) in this mining lease is one of the worst case ever noticed in this investigation. In this row, 900 Form no. 27
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were issued after the expiry of lease period which expired on 23/03/2010. The details are given at Table – 11 of Chapter-7 in the report of Dr. Singh.
15) It should be easily calculated from the facts mentioned at Table – 11 that, an approximate quantity of 14400 MT at the rate of 16 MT/truck must have been transported provided no overloading. But here the overloading is noticed.
16) The Deputy Conservator of Forests, Bellary has issued an order on 22/03/2010 for deputing 17 Foresters to issue Form no. 27 for the AMC in addition to the foresters already engaged for this purpose (A show of power practically unheard).
17) The duplicate copies of Form no. 27 issued by the foresters from January 2010 to 26th March 2010 have been collected by the investigating agency in this investigation. The permits have been examined and the finding is that the condition of permits which were signed at mine head and at the office of Range Forest Officer is quite different. Dr. Singh who has wide knowledge of mining areas has recorded “the permits issued at mine head are full of dust and reddish in colour. The permits signed at range office are fresh and looking new.” It is physically not possible to transport such a large quantity in two days through a single road used by lessee. For this reason, Dr. Singh summoned all the Forest Officers who were engaged in issuing the permits and they were requested to submit their version regarding what had happened in the process of issuing the transit permits. According to Dr. Singh, the foresters unanimously has admitted that under threat they have signed the transit permits (form no. 27) sitting in the office of the Range Forest Office, Sandur. On going through the letter given by the said Foresters, it is clear that no transit permits were issued at
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mine head. The permits were issued under threat at Forest Range office and there is every possibility that there could not have been iron ore at the mine head or the said permits could have been used after the expired lease period, or the permits were misused to transport iron ore from some unknown source. This shows the powers vested in political bureaucracy not democracy.
18) The transit permits issued for the truck numbers used in transportation to Belekeri port have been cross examined with the entries at Belekeri port. It is found that the Form no. 27 issued for trucks to transport iron ore from Associated Mining Company were actually loaded from PK Halli. The transporter was MTC Logistic Pvt. Ltd. This indicates the permits were misused to transport iron ore from the different source.
19) Further it is observed that in many cases iron ore was illegally transported earlier while the permits were issued later. In such cases, permits for large quantities were issued during March 2010 and corresponding quantity of iron ore was not supplied thereafter against those permits. This clearly indicates that such companies/firms had obtained permits to cover up their earlier transportation of illicit iron ore. It also indicates that this cover up was done in response to the Lokayukta search and raid in February 2010 and subsequent actions. The suspect companies in this regard are Bharat Mines & Minerals, Rajmahal Silks, SSTA, VSL, Twenty First Century, Eagle and Balaji Enterprises.
20) It is also to be noticed here that the Deputy Director, Mines, Hospet had issued MDP for about 80000 MT of iron ore to be transported to Belekeri Port (table 12) from Associated Mining Company (Eagle Trading & Logistics). The records of
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Belekeri Port (Sree Mallikarjuna Shipping Pvt. Ltd and Adani Enterprises) were cross verified and it is found that the iron ore had not been received at Belekeri Port as claimed in the MDPs in the month of March 2010. The quantity received at Belekeri Port pertaining to Eagle Traders is about 11,387 MT in the month of March 2010 as against the MDP obtained for 80,000 MT. The taking of MDP and payment of royalty has been done to cover up the illegal iron ore already transported at the Belekeri port by M/s. Eagle Traders and Logistics. It is to further state here that the Lokayukta police have made a search on 20-02- 2010 and seized records at Belekeri Port and there was high publicity in Media about illegal transportation of iron ore to Belekeri Port in this period. The Table – 12 gives the particulars of the MDP issued from AMC to Belekeri port in favour of Eagle Traders and Logistics.
21) In the above said facts and circumstances, the report of Dr. Singh has found the following illegalities and suggested various actions. Having carefully perused the same and having agreed with the findings of Dr. Singh in his report referred to above, I endorse the same and state that the Government of Karnataka and other appropriate authorities should take suitable action as deemed fit in regard to the following act against the concerned officers and companies that have benefited from these acts.
(1) The M/s. Associated Mining Company had been granted mining lease ML No. 2434 (old 625) for a period of 30 years w.e.f 02.03.1966 over an area of 16.9 hectares in Venkatagiri village of Sandur taluk, Ramghad forest block (Ramanmalai block) of Bellary district Karnataka State for winning of iron ore mineral. The lease period expired on 01-03- 1996.
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(2) After expiry of the mining lease period on 1-03-1996 the first renewal had been effected from 24-03-2000 having kept gap of 4 years (01-03-1996 to 23-03-2000). Hence there was no continuity for this renewal. The first renewal is improper and in violation of Mines and Minerals (Regulation & Development) Act. There is no approval from Central Government for this deviation under the MMRD.
(3) This first renewal had been approved by the then Hon'ble Minister of Mines Sri V.Muniyappa contrary to the recommendations made by the office of Secretary, Mines.
(4) The then Director, Mines has submitted incorrect information to IBM, Government of India regarding the facts of lease period and its renewals. The Director has erred in disclosing the facts to IBM, Government of India.
(5) The Mining lease granted in favour of Associated Mining Company is since been taken over presently by all together new managing partners through back door entry to overcome the law. The new managing partners are Mrs. G. Lakshmi Aruana and Mr. G. Janaradhana Reddy. The confirmation of lease rights or interest upon new managing partners is in violation of Rule 46 (2), 48 and 37 of MCR 1960. Action should be taken under Rule 50 of the MCR. Further the renewal application pending before the Government should be rejected.
(6) The new management has taken over mining lease since 01-08-2010 (Smt G. Lakshmi Aruna and Sri G. Janardhan Reddy). The new managing partners have opened a new account no. 31000313003 in SBI, Bellary. This account number has not been informed to Commercial Taxes Department for collection of
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VAT purpose. Instead the old account no. 1425201000179 of Canara Bank, Bellary has been reported to the Department while having new registration for VAT. Action should be taken against the new managing partners.
(7) After taking over the AMCs lease by Mrs. G. Lakshmi Aruna, and partner, the old office is changed to #123, Veerana Gouda Colony, Near Kumaraswamy Temple, Bellary. A new agent was appointed for conducting day to day affairs.
(8) The then Director, Mines Sri M.E. Shivalinga Murthy has approved the issuance of MDP without taking approval of Central Government for transfer of rights or interest to new managing partners. He is not a Competent Authority to do so. It is in violation of Rule 46(2) and 37 of MCR 1960. Action should be initiated against him as per law.
(9) In the new account of AMC in SBI Bellay a/c no. 31000313003, there is a debit 269,15,73,602.00 and credit of Rs. 270,60,93,762.00 after 01-08-2009 to 08-02-2011. There are many huge transactions in the said account. The transaction gives the linkages between the Associated Mining Company and other companies/firms/individuals.
(10) There is credit of Rs. 14,00,00,000.00 (Rupees Fourteen Crores) from Janadevi Minerals (11347) on 31-05-10 and 19-07-10 in the account of AMC. There is no permits (MDP) issued as a party/purchaser from AMC. The Janadevi Minerals is also a front company/firm of ILC. Likewise, Rs. 34,15,00000.00 (Rupees Thirty four crores fifteen lakhs) have been credited from the account of Lakshmi Aruna Minerals (HDFC) on 25-06-10, 31-07-10, 20-08-10 and 30-08-10 in the account of AMC (SBI 3003). Mrs. G. Lakshmi Aruna is the
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Managing Partner in both firms. There is another credit of Rs.3,00,00,000.00 (Rupees Three Crores) on 07-05-2010 from HDFC Bank of Eagle Traders and Logistics. It is to further state that these credits are not the final figures and only indicative. There are more transactions of this kind in this account. The money has been credited to this account (SBI 3003 of AMC) through circuitous route. This indicates illegal activities of AMC in collusion with other companies.
(11) It is pertinent to state here that royalty has been paid from the bank account of AMC (SBI, Bellary A/c no. 3003) to get issue MDP of the BRY Mines ML. No 2186. An amount of Rs. 96,80,000.00 and Rs. 87,44,000.00 have been paid in the form of Demand Draft favouring Deputy Director, Mines, Hospet. The permit numbers 5771884 dt. 22-05-10 and 571740 were issued. The permits were issued to transfer iron ore from BRY lease to JSW and Lakshmi Aruna Minerals has been stated as purchaser. As observed in the chapter of lease of B.R. Yogendranath Singh that in the said lease there was no iron ore available. Hence these permits were used in proxy to transport iron ore from unknown source. Action should be taken to recover the cost at market rate for the entire quantity against these permits.
(12) Further there are debits from this account (SBI 3003) to Sri Bhakta Markandeshwara Minerals (SBMM) (Axis 2669), Divakar Minerals, JJ Impex, Shantha Lakshmi Jairam, Brahamini Industries, Vijay Mining Infrastructure and many others. The trail of huge amount in this account (SBI 3003) is allegedly linked with the illicit removal of ore from various mines which is separately dealt in this report.
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(13) The Deputy Conservator of Forests, Bellary has issued Form no. 27 for a quantity of 628032 MT to transport iron ore from the mining lease of AMC as stated in table 10. The then Deputy Conservator of Forests Sri S. Muthaiah had issued the transit permits without recovery of FDT of an amount of Rs. 19191600.00. This is a violation under the Karnataka Forest Act and also undue favour to the AMC. The FDT has not yet collected and the lease period has expired and closed. This has caused a loss to the State Government of the said amount. The DCF went on issuing the Form no. 27 keeping in pendency of recovery of FDT. Disciplinary action should be taken against him for undue favour and loss of Rs. 19191600.00 to State Government.
(14) The Deputy Director, Mines, Hospet has issued a bulk permit for the quantity of 24992 MT on 16-01-2010 for one month. In the said period 45107.55 MT have been supplied to JSW Steels Ltd, Torangallu. This excess supply of 20115.55 MT is due to over loading and multiple trips against a single trip sheet or Form No. 27. This is utter misuse of the official power and the transit permits. The recovery of cost for the excess quantity of 20115.55 MT and with exemplary penalty from the AMC should be done. Other contemplated legal action should also be initiated.
(15) About 900 transit permits (Form no. 27) have been issued after expiry of lease period. The details are given in table 11. This is a blatant misuse of Form no. 27. Action should be initiated against the concerned Foresters, Range Forest Officer and Deputy Conservator of Forests, Bellary.
(16) 4,88.565 MT of iron ore has been supplied to JSW, Torangallu by Associated Mining Company from Jan 2010 to
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July 2010 (table 7). It is to note here that since the lease expired on 23-03-2010 the validity of the permits also expiries accordingly. Hence iron ore supplied from 24-03-2010 is illegal and unlawful. The quantity of 3,03,573 MT of iron ore supplied since 24-03-2010 to JSW by Associated Mining Company is illegal. There are no permits, AMC as a party, were issued from Deputy Director, Mines, Hospet and Deputy Conservator of Forests Bellary. It is presumed that either the mining activities continued after the expiry of lease period or the iron ore was supplied from unknown source. The market cost of the entire quantity of 3,03.573 MT iron ore should be recovered from the lessee with exemplary penalty. Further any other legal action should also be initiated.
(17) The Deputy Conservator of Forests, Bellary has issued transit permits on 22-03-2010 for transportation of 80000 MT iron ore from the lease in two days. This is misuse of power and authority without application of mind. The Deputy Conservator of Forests has shown undue favour and facilitated illegal mining activities. Action should be initiated against the then Deputy Conservator of Forests, Bellary.
(18) The Deputy Conservator of Forests has issued an order dated 22-03-2010 for deputing 17 foresters in addition to the already engaged for the purpose of issue of Form no. 27. All the foresters were called at the Range office and asked to sign the Form no. 27 sitting in the Range forest office. The transit permits were signed in the Range office under threat as confessed unanimously by them. This is nothing but misuse of authority and powers. It is a serious issue and stringent action should be taken. The transit permits issued were misused.
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(19) Transit permits, bulk permits and trip sheets have been issued for transportation of 80000 MT iron ore from the AMC lease to Belekeri in favour of Eagle Traders in the month of March 2010 (table 12). On verification of receipt at Belekeri Port it is found that only 11387 MT of iron ore have been supplied in the month of March 2010 by Eagle Traders. The obtaining of bulk permit/ transit permits by Eagle Traders was mainly to cover up the already illegally transported iron ore. Appropriate action should be initiated against Eagle Traders.
(20) Multiple irregularities had been committed by the lessee under the colour of power. It is a fit case to cancel the lease grant and reject the renewal application. Further there is hardly 10 million tons iron ore reserve left out in the leased area and with the present rate of production it will last for another 9- 10 years only of the grade 60 plus.
22) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
23) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
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24) In view of the misconduct of Sri G.Janardhana Reddy, Minister, noted in this Chapter, I recommend to the Competent Authority for his removal from the Cabinet.
25) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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8
UNDER INVOICING, EVASION OF TAXES, DUTIES BY OBULAPURAM MINING COMPANY
The Report submitted by Dr. U.V. Singh team, a copy of which is found at Chapter-8 shows that M/s. Obulapuram Mining Company Private Limited (OMC), Ennoble House, Raghavachari Road, Bellary had the following Directors at the relevant time. (1) Sri G. Janardhana Reddy, (2) Smt. G. Lakshmi Aruna (3) Sri G. Karunakara Reddy, (4) Sri D. Parameshwara Reddy, (5) Sri B. Sree Ramulu.
It is also seen that a private company by name Man-Go Pub Pte Ltd has been registered on 28/10/2004 at Singapore, the object of the said company is to provide entertainment, food and beverage (Annexure to Chapter-8 at page 3 to 60 of Dr.U.V. Singh’s Report). The Director of the company was Mr. Seah Seow Kang Steven, whose address is No.17, Green View Crescent, Hillcrest Park, Singapore 289326.
2) Subsequently there was a change of Directors and other officials of the Company in 2007. One Sri Arangannal S/o.Kathamuthu, Singapore was appointed as Director among others. Subsequently, an application was filed on 23/11/2007 to change the company name from Man-Go Pub Pte to GLA Trading International Pet Limited. The principal activities of this company were also proposed to be changed from restaurant Bars and Canteen to general whole sale trade including general imports and exports. This has been done by passing a Special Resolution on 30th November 2007. It is interesting to note that the letters GLA refers to Gali Lakshmi Aruna W/o. Gali
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Janardhana Reddy. On 19th December 2007, Sri Janardhan Reddy was appointed as Director of this Company, showing his addressed as No.8, Ashok Nagar, Havambhavi, Siruguppa Road, Bellary. One share of this company i.e. GLA was transferred in favour of GJR Holdings International Limited with its address at Isle of Man on 21/12/2007 and same transaction was lodged with ACRA on 4/1/2008. Again it should be noted that the letter GJR in this company refers to Gali Janardhana Reddy and the company is registered in Isle of Man, which is our internationally known “Tax Heaven”. The said share was further transferred in favour of Interlink Services Group Limited, British Virgin Islands in June 2009. The British Virgin is also known to be a “Tax Heaven”. The role of GJR Holdings International Limited and Interlink Services Group Limited under the above circumstances, requires further probe by the competent authorities.
3) It is to be noted that after the enquiry into the illegal exportation was initiated by Lokayukta, Sri Janardhana Reddy ceased to be the Director of the above Company with effect from 30/12/2009 by resignation.
4) During the period when Sri G. Janardhana Reddy was the Director of the Company, the GLA Pet Limited had imported iron ore to the tune of 8,52,033 MTs from OMC, Bellary the origin of the ore is shown at Ports from Karnataka. There was no export of iron ore, before or after the period when Gali Janardhana Reddy was the Director of GLA, from OMC. This is seen from the export data obtained from Customs Department.
5) On a request made by the investigation team of the Lokayukta, the Income Tax Department on 19th April 2011 provided tax assessment orders made on 26/4/2011 of M/s.
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OMC. This order is dated 26/4/2011, which is enclosed at pages 61 to 86 of Chapter 8 of Report of Dr. U.V. Singh. This assessment order shows under invoicing of cost of iron ore, export sales to GLA Trading International Limited, Dubai by OMC. The report of Dr. U.V. Singh team extracted the relevant paras of the assessment orders, which may be seen for the purpose of understanding the modus operandi of OMC in exporting the iron ores. The said assessment order clearly makes out a case of relationship between the OMC and GLA Trading International Limited, Dubai and the quantum of export made and the value declared therein. Table-1 in Chapter-8 of Dr.U.V.Singh’s Report provide details of under invoice made by OMC for the year 2007-08 as assessed by the Income Tax Department, which is huge. Having noticed the details of export of iron ore made by this company (OMC), all details of export of iron ore was sought from the Customs Department 0f Kakinada, Krishnapatnam, Vishakapatnam, Chennai, Mangalore, Belekeri, Karwar, Murmagao and Panaji. The details are further verified by the investigation team with regard to GLA as consignee. The details of Mangalore Port has not been taken into consideration, since there is not much difference found during the month of October 2008. The details received also shows that there is no export from Belikeri, Karwar, Murmagao and Panaji ports by OMC to GLA. However, the Customs House, Kakinada has given information/particulars of export made by OMC to GLA, Dubai. It is interesting to note that Table-2 in Chapter-8 of Report prepared by Dr. U.V. Singh’s team shows that most of the exports were shown as originating from Karnataka. Similarly, the report pertaining to Krishnapatnam, Vishakapatnam Ports also indicates such exports, as could be seen from Table 3 and 4 of Chapter 8. A careful perusal of the charts prepared by Dr. U.V. Singh’s team at Table-5 of Chapter-
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8 shows that the OMC has exported 8,09,299 MTs (excluding exports from Mangalore) to GLA in the year 2007-08 and 2008- 09. The difference of rates of sale of iron ore per MT was calculated by the investigating team, taking into consideration the average rate for which the OMC has sold the iron ore to other consignees and to GLA in the same month and year (as calculated by the I.T Department). This difference was then multiplied with total quantity of iron ore exported and net difference is taken as final figure for each consignment separately and then cross checked the total. Thus in the Table- 5 of Chapter-8 the data obtained from Customs Department or respective ports is taken into consideration for rates, quantity and other factors necessary. The total under invoicing in US $ and INR comes to $52,341,292.00 corresponding to Rs.215,12,50,387.00. The face value of the US$ was taken at the prevailing rate during that time. At this stage, it should be noted that this Under Invoicing has caused loss to the Government from export made to GLA by OMC for two years i.e. 2007-08 and 2008-09 only.
6) It is also to be noted that the foreign exchange involved in this case, has not come to Union of India and indicates that this amount might have been parked in some Banks in Tax Heaven countries. Therefore, it is necessary that the competent department should be asked to investigate as to where this money is parked and approximately a sum of Rs.215,12,50,357.00 which should have been profit of the Government from OMC and consequent to evasion of Customs duty, Income Tax and other Taxes should be investigated and collected by the respective department. That apart, appropriate legal action should also be initiated against the company, Directors of OMC and GLA in accordance with law.
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7) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
8) The State Government may request the Competent Authority in Govt. of India/ Reserve Bank of India to take action under the relevant Law for parking money outside the country.
9) Sri G.Janardhana Reddy, Sri G.Karunakar Reddy and Sri B. Sree Ramulu, were Directors of Obulapuram Mining Company at the time when the misconduct, mentioned in this Chapter, was committed. Hence, I recommend to the Competent Authority for removal of these Ministers from the Cabinet.
10) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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9
ILLICIT EXTRACTION, TRANSPORT, EXPORT & DOMESTIC CONSUMPTION OF IRON ORE IN 2009 AND 2010 AT 40:60 OR 50:50 SHARING OF PRODUCTION AND DISPATCHES _ _ _ _
This chapter deals with a new, but a serious malpractice, introduced by certain powerful people in the mining industry for their personal benefit, in the iron ore mining that is taking place in the Districts of Bellary, Chitradurga and Tumkur. This modus was put in place after my first mining report, obviously with a view to increase the illegal mining.
2) Anybody concerned about the State’s legitimate income will be a wonder track to know the quantity of iron ore, which was illegally mined from only 11 mines out of about 160 mines in the above referred regions, which is 73,99,314 MTs, for a limited period during 2009-10. The cost of the illicit iron ore at a moderate rate of 2,500/- per MT comes to Rs.1849,82,85,000/-. At the cost of repetition, I say that this is only for about 14 months in the year 2009-10.
3) The Lokayukta investigating team headed by Dr. U.V. Singh enquired the illegal mining with special reference to illegal export, has done tremendous job in discovering this method of illegal mining. I deeply appreciate their work. Reading their input makes one feel, how ingenious this powerful group is, in their illegal activities.
4) The annexures referred to in this chapter, shall be read as annexures in the chapter of investigating team under the above heading, which is Chapter-9.
5) In my letter No. COMPT/LOK/IT/2010-11 dated 27/1/2011 a request was made to the Director General of Income Tax (Inv), Central Revenue Building, Bangalore to
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disclose the information related to documents including the electronic information searched and seized by the Income Tax Department in 2010 pertaining to various raids conducted in various companies/ firms/ individuals related to iron ore trading and export in State of Karnataka. In this connection a pen drive containing the digital evidence captured from the CPU seized from the residence of Mr. Ali Khan, “Sai Nilayam”, 3rd Cross, Inna Reddy Colony, Bellary on 02.11.2010 has been provided to this office. The seized records are marked as A/AK/2 (Annexure 1 of Chapter-9). Further certain documents seized by Income Tax Department in the case of Madhu Kumar Verma from the premises of Lalezhar Apartments at Bangalore inventoried as A/Madhu/1 have also been provided (Annexure 2 of Chapter-9). The provided data have been examined in this investigation. The copy of these data is also available with the Income Tax Department.
6) The provided documents have been examined and verified with the records of Mines department, Custom department, various bank accounts and others.
7) It is evident from the analysis of computed figures in Chapter 1 “Export of illicit iron ore of Karnataka origin during 2006-07 to 2010” that there was extraordinarily large scale transportation of illegal iron ore without valid permits in the years of 2009 and 2010. In the Chapter “Illegal Iron Ore Mining Activities by KV Nagaraj, Karapudi Mahesh and their Associates”, it is found that the illegal iron ore supplied for domestic consumption was also high. Examination of these documents discloses that a large part of the extraction, transportation and trade of illicit iron ore along with other illegal mining activities in the said period was contributed by the
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people/groups/firms/ others mentioned in these documents. The documents also provide an insight into the planning and modus operandi adopted by them in systematic extraction, transportation and trade in illicit iron ore.
8) The documents reveal that a “group” of persons/ companies whose names appear in digital data went about systematically to:
(i) Identify certain mining leases which were either having boundary disputes or any other disputes or did not have requisite permissions to operate;
(ii) Creation of “front companies/firms”;
(iii) Take control of these mining leases by either making them sign agreements with front companies of the “group” or through other means;
(iv) Plan illicit extraction and transportation of iron ore to meet the “commitments” and other requirements of the group;
(v) Involve “raising contractors” who would carry out extraction of iron ore in these mining leases.
(vi) Involve transporters who would facilitate illicit operations;
(vii) Involve middle traders (most of who were already in illegal mining and trading of iron ore business) who would trade in illicit iron ore and facilitate the flow of money in circuitous route to the group
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(viii) Supply illicit iron ore to exporters / domestic consumers;
9) The examination of seized file A/Madhu/1 25.10.2010 shows among others;
(i) “Details of “Running Mines Details” and “our requirement” (Page 4 of Chapter-9);
(ii) Details of “Mines stopped by ****” and “Mines closed because of own problems”;
(iii) “List of stopped mines in Sandur Range during 2010-11”. (Annexure 3 of Chapter-9);
It is apparent that some mines were carefully identified using this information so as to meet the requirements of the “group”.
10) Creation of front companies: The following firms/ companies were used for signing agreements with identified mining leases.
(1) Devi Enterprises – This partnership firm was formed with K Mahfouz Ali Khan aged 25 years and V Chandrashekar aged 26 years on 07/03/2009 and registered with the Registrar of Firms on 18/03/2009. The instrument of partnership declares that nature of business of the firm is to do business in mining of iron ore and other minerals. It is significant to note that both partners were former employees of Brahmani Industries Limited. Copies of relieving letters show that both K Mahfouz Ali Khan Emp ID10006 and V Chandrasekhar Emp ID 10008 worked in the company from 12/07/2007 to 28/02/2009. (Annexure 4 of Chapter-9)
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(2) Madhushree Enterprises – This partnership firm between Sri Madhu Kumar Varma aged 24 years and Srikanth aged 27 years was formed on 26/03/2009 and registered with the Registrar of Firms Karnataka on 04/04/2009 (Annexure 5 of Chapter-9). The instrument of partnership declares that nature of business of the firm is to do business in mining of iron ore and other minerals. It is interesting to note that as per the instrument of partnership, Madhu Kumar Varma and Srikanth are aged 24 years and 27 years respectively. At this young age and within 2 months of registration of the firm they apparently entered into an agreement to provide technical expertise and knowhow to JM Vrushabendraiah (a well established lessee) in return for 40% of the mined iron ore as consideration.
(3) Sri Minerals - It is a partnership firm which has BV Srinivas Reddy as its Managing Partner. B V Srinivas Reddy is also one of the partners in Obulapuram Mining Company.
(4) Sri Basaveshwara Minerals - It is a partnership firm which has BV Srinivas Reddy as its Managing Partner. BV Srinivas Reddy is also one of the partners in Obulapuram Mining Company.
In addition, it is to be noted that the Instrument of Partnerships of Devi Enterprises and Madhushree Enterprises were signed in the presence of a Chartered Accountant, Phani Kishore Amberkar. It is pertinent to note the role of Phani Kishore Amberkar in getting registration for front partnership firms, getting agreements between front partnership firms and various mining leases and in handling various financial transactions are prominent.
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Among others, (i) A file containing details of Rs 95 crore payments from ILC is named PHANI.xls.;
(ii) A file named salaries-09 (1).xls lists the names of leases/mines, the firms controlling the operations in these leases/mines, the names of the employees of these firms, their mobile numbers and their monthly salary statements. In this file the name Phani Kishore appears as the person who is approving the salary payments to the employees;
(iii) A pdf file containing mail from Avery India to Phani Kishore (mail ID: [email protected]) contains attachments proforma invoices – Obulapuram;
(iv) E mail regarding allotment of TAN number to Devi Enterprises from TAN.nsdl.co.in to Kishore Amberkar;
(v) Submission of details of procurement of iron ore for exports from M/s Anantpur Mining Corporation and Lakshmi Aruna Minerals by Phani Kishore Amberkar. (Annexure 6 of Chapter-9);
11) Agreements of front companies with various iron ore mining lessees: The seized documents contain copies of agreements entered between various lease holders and “front companies”. An examination of the agreements entered between the front companies and various lease holders is as below:
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(1) Trident Minerals ML No 2315, Venkatagiri Village, NEB Range, Sandur taluk, Bellary: Trident Minerals entered into separate agreements on 22/01/2009 with Sri Minerals and Basaveshwara Minerals. The agreement with Sri Minerals was for extraction and the agreement with Basaveshwara Minerals was for sale of iron ore.
Significantly, both Sri Minerals and Basaveshwara Minerals are partnership firms with a same individual as its Managing Partner. The person is Sri BV Srinivasa Reddy and he has signed the agreements on behalf of both Sri Minerals and Basaveshwara Minerals. This effectively means that Trident Minerals entered into agreements with Sri BV Srinivas Reddy. (Annexure 7 of Chapter-9).
The agreement with Sri Minerals is signed for extraction of mineral/ore from the mining lease of the Trident Minerals. The agreement is a 'raising contract' in violation of the provisions of MMRD Act and MC Rules.
The agreement states that Trident Minerals is “encountering various difficulties and disputes from the neighboring lessees, which is resulting in low production and hampered production.” and that Sri Minerals is “having all the men and machinery for the purpose of undertaking the mining operations in large scale and also to encounter any trespass or encroachment or hampering of mining operations either by the neighboring lessees or by their men and agents.” This clause indicates limitation of the First party in running mining operations of very old lease and highlights the clout of the second party.
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The agreement period is till the expiry of Mining lease No 2315 of the schedule property in the year 2013. The agreement provides for renewal of the agreement subject to renewal of the lease by the second party at its cost. It is pertinent to note that assigning the task of lease renewal to second party engaged for the purpose of ore extraction is practically the same as divesting control over the mining lease and transfer of lease by the lessee in contravention of the MC Rules.
The First Party shall pay to the second party a sum of Rs 250/- (Rs Two Hundred & Fifty only) for every metric ton of iron ore extracted and processed from the said mine at stockyard.
The agreement mandates that the second party shall excavate and extract a minimum quantity of 10 lakh metric tons of ore per annum, which is in excess of the 4 lakh MT annual limit imposed under EC clearance.
The agreement stipulates that all costs towards payment of Government levies, salaries, statutory levy/fee such as royalty, geological permit and Forest Permit charges/fee shall be on account of the Second Party. This indicates that the rights of the lessee are virtually transferred to the second party.
The agreement specifies that the second party is responsible for ensuring that the lease area is safeguarded from encroachments and interferences and that the lease boundaries are marked and free from disturbance from adjoining miners. The adjoining mine is former Dalmia Mines. This implies that the First party has relinquished its responsibilities to the Second party in contravention of MMRD Act/ MCR.
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An examination of the agreement with Basaveshwara Minerals shows that this agreement is for exclusive purchase by Basaveshwara Minerals of 50% of the entire quantity of minerals extracted from the lease of Trident Minerals. The sale price of 50% of quantity sold to the second party is fixed at Rs 500 per MT irrespective of its grade and size. The agreement also specifies the sale price of the balance 50% quantity at Rs 600 per MT to be sold by the First party. This price is very low when compared with the prevailing prices. Further, the agreement puts the responsibility of securing renewal of lease on the second party upon which the agreement shall be automatically renewed till the expiry of such renewed period i.e. 20 years. This clearly implies that the agreements goes much beyond a contract between a buyer and seller and through these agreements Sri Minerals and Basaveshwara Minerals (both being controlled by the same individual) have taken over the rights of the lessee.
It may also be noted that Trident has to pay Rs 250 per MT to Sri Minerals for total production/extraction, while Trident is to receive 500/- per MT from Basaveshwara Minerals for sale of 50% of production. Considering that both Sri Minerals and Basaveshwara Minerals are controlled by the same individual, it implies these companies are running lease with no money flow to the lessee. The lessee is a “sleeping partner” and gets at the most 50% of production at zero input cost.
(2) Mehaboob Transport Company ML No 109 & 2568, Vittalapura Village, Sandur taluk, Bellary : Mehaboob Transport Company entered into separate contracts on 28/08/2008 with two partnership firms Sri Minerals and Basaveshwara Minerals for extraction and exclusive sale of 50% of extracted ore respectively on similar
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terms as stated for Trident Minerals (Annexure 8 of Chapter-9). With the same modus operandi is as evident in the case of Trident Minerals, these two companies have taken over the mining operations of MBT lease. It is nothing but a transfer of lease. It is to be stated here that M/s. Trident Minerals and Mahaboob Transport are owned by the common partners.
(3) JM Vrushabendraiah ML No 2173:
JM Vrushabendraiah entered into a memorandum of understanding with Madhushree Enterprises dated 18th/9th June 2009 (Both dates are mentioned in the MOU) (Annexure 9 of Chapter-9). It is apparent the MOU has been made with back date as the date of stamp duty payment mentioned on the stamp paper is 22nd June 2009. The agreement states that Madhushree Enterprises shall extend to JM Vrushbendraiah its knowledge expertise and technical knowhow for carrying on the mining operations in a more systematic and scientific manner. In return JM Vrushabendraiah agrees to pay the consideration to Madhushree Enterprises by way of 40% of the quantity mined from the leased area. The agreement appears suspicious as the scope of work of second party is vague and does not appear to commensurate with quantum of consideration (40% of the mined iron ore). The experience of Madhushree Enterprises to provide technical expertise and knowhow is unconvincing and doubtful as the partnership firm was only two month old at the time of this MoU, as it was registered on 04/04/2009. The agreement is in violation of various provisions of MC Rules 1960 and MMRDA 1957.
In 2008, this mine was closed due to encroachment and extraction of iron ore from adjoining forest land. The matter went to Hon’ble High Court and Hon’ble High Court directed
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that the Lessee may be allowed to do mining in undisputed area. In the said mine there is hardly any deposit of iron ore in the undisputed area. Presently survey is underway under orders of Hon’ble Supreme Court. In the light of these facts the signing of the agreement to work in the mine appears to be a conspiracy. Further investigations are required to know more facts in this regard.
(4) Indian Mines and Minerals ML No 2572 NEB range Siddapura Village, Sandur taluk: Indian Mines and Minerals was granted mining lease in ML No 2572 dated 05/01/2008. Indian Mines and Minerals is a partnership firm formed through a Deed of Partnership dated 05/02/2008. The partners in the firm include N Shaik Saab, Mohammed Yunus, Mohammed Sait and Rasool Saab. On 01/08/2009, through an Instrument of Partnership, K Mahfouz Ali Khan and Syed Asimuddin were included as Incoming Partners (Annexure 10 of Chapter-9). Further, the shares of the partners were fixed as follows: Sl. No Name of partner Profit Loss 1 N Shaik Saab 5.00% 2 Muhammed Sait 3.34% 3 Mohammad Yunus 3.33% 4 Rasool Saab 3.33% 5 Syed Asimuddin 10.00% 6 K Mahfouz Ali Khan 75.00% 100% Further through a power of attorney dated 02/08/2009, K Mahfouz Ali Khan was given the power of attorney in running the business of the firm and empowered him to enter into contract with buyers, transporters, supplier of equipments, labour contracts etc, sign documents, fix rates of supply of ore, draw bills, issue vouchers and open and operate bank accounts as per Annexure 10 of Chapter-9. Further he was entitled to
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represent before the authorities including Department of Mines & Geology, Forest, Railways, Indian Bureau of Mines etc to secure permit licences, contracts etc. He was further entitled to apply to the government for transfer of lease hold rights under the mining lease and all such applications, documents as may be necessary for expeditious working of the mines. This shows K Mahfouz Ali Khan had taken over complete management and operation control over Indian Mines and Minerals. It may be noted that K Mahfouz Ali Khan is a Managing Partner in Devi Enterprises. The agreement is in violation of MMRD and MCR.
(5) Rajapur Mines
Rajapur Mines has a mining lease in ML No.2190 The partnership firm had 5 members viz. Smt PH Vidya, B Neelkantaiah, B Sudhakar, P Jayanth and P Suresh. As per a copy of Form “A” Register of Firms dated 08/08/2009, three partners viz. B Sudhakar, P Jayanth and P Suresh retired on 08/08/2009 and on the same date S Murali Krishna and Madhu Kumar Varma joined as partners (Annexure 11 of Chapter-9). It may be noted that Madhu Kumar Varma is a Managing Partner in Madhushree Enterprises. There are encroachments in Forest land by the lessee as per the First report of Hon'ble Lokayukta.
In this context,
1. Rule 37 of Mineral Concession Rules 1960 is reproduced below: “Transfer of Lease:- (1) The lessee shall not, without the previous consent in writing of the state government [and in case of mining lease in respect of any mineral specified in the First Schedule to the Act, without the previous approval of the state government;
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(a) Assign, sub-let, mortgage, or in any other manner, transfer the mining lease, or any right, title or interest therein; or
(b) Enter into or make any arrangement, contract or understanding whereby the lessee will or may be directly financed to a substantial extent by, or under which the lessee’s operations or undertakings will or may be substantially controlled by any person or body of persons other than the lessee;”
2. Rule 46 (2) of Mineral Concession Rules (MCR) 1960 is reproduced below: “Transfer or assignment – (2) No prospecting licence or mining lease or any right, title or interest in such licence or lease in respect of any mineral specified in first schedule of the Act shall be transferred except with the previous approval of the Central Government.”
The above mentioned agreements with mining lessees are in violation of Rule 37 & 46 of Mineral Concession Rules, 1960.
Further, it is to be noted that these lessees had been carrying out mining operations on their own for many years. However, within a span of a few months all these lessees entered into contracts for extraction, sale and technical support with select companies/firms having vague expertise. Closer examination shows that the agreements are unrealistic and one sided.
12) Plan illicit extraction and transportation of iron ore to meet the “commitments” and other requirements of the group
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A file “Stock Details.xls” contains several spreadsheets as discussed below (Annexure 12 at Chapter-9):
(a) Spreadsheet “Permitted quantity” shows mining lease wise permitted quantity (indicating annual permitted quantity that may be extracted) and “our portion” indicating share of the “group” in iron ore produced. The mines included are MBT (Mehaboob Transport Company ML No 2658), Hind Traders (ML No 2548), Trident Minerals (ML No 2315), Trident Mining Company (ML No 1732), VENAG (Shantalakshmi Jairam ML No 2553), SVK NEB Range A & B Block Jaisingpura (SB Minerals ML No 2550), SVK Vyasankere ( SB Minerals-ML No 2515), JM Vrushabendraiah (ML No 2173). Other mines mentioned in the list are Shaik Sab (Indian Mines and Minerals ML 2572), Mansoor Ahmed (ML No 1324 & 2616), VEEYAM (ML No 988) and KMP (K Parvathamma ML No 2514). The total quantity under “OUR PORTION” out of production from these mines is shown as 63,21,800 MT of iron ore.
(b) Spreadsheet “Stock” shows mining lease wise commitments and dispatches for various mines.
(c) Spread sheet “COMMITMENTS AND MOVEMENTS” shows details of commitments and dispatches from various mining leases. The total commitment against M/s ILC only is shown as 8,96,418 MT.
13) Involve “raising contractors” who would carry out extraction of iron ore in these mining leases A file “Stock Details.xls” contains several spreadsheets as discussed below (Annexure 12 of Chapter-9): Spreadsheet “Permitted quantity” contains names of “raising contractors against the mines as shown below:
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Table 1 – List of Mines and their Raising Contractors
MINES RAISING CONTRACTOR MBT DUSHYANT REDDY HM DUSHYANT REDDY RK MINING TM & TMC RK MINING VENAG ANANTASENA REDDY SVK NEB RANGE A BLOCK OWN-YERRIBABU SVK NEB RANGE B BLOCK OWN -NANDA SINGH SVK Vyasanakere VRUSHABENDRAIAH OWN-(SRINIVAS) SRINIVASA REDDY - SHAIK SAB thirumala conveyors NHP-MANSOOR AHMAD VEEYAM PVT LTD DUSHYANT REDDY KMP
The names of the raising contractors are also mentioned in spreadsheet “Stock”.
14) Involve transporters who would facilitate illicit operations A file “S.V.K NEB B BLOCK.xls” has spreadsheet “SWASTHIK & JAMMUNATH” that contains details of iron ore movements on account of Swasthik and Jammunath. Swasthik (Swastik Nagaraj) and Jammunath (Karapudi Mahesh) own transport companies engaged in iron ore transportation. Further as discussed in separate chapter, they along with others are involved in transportation of illicit iron ore. It is pertinent to note that documents seized by the Income Tax Department in the case of Sri KV Nagaraj show large scale transportation of illicit iron ore from the various mines including many of the mines listed above.
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15) Involve middle traders to trade in illicit iron ore and facilitate flow of money through circuitous route to the group
The following companies/firms/persons were involved as middle traders of illicit iron ore (as inferred from the contents of Annexure 1 of Chapter 9 of Dr.U.V.Singh’s Report:
1. Eagle Traders and Logistics & Others 2. “Front companies” -Devi Enterprises and Madhushree Enterprises 3. Swastik Nagaraj 4. Jammunath Mahesh (indicating Karapudi Mahesh) 5. Y Minerals 6. Nirmal Jain 7. Shafiq 8. Lakshmi Aruna Minerals 9. SSM indicating Sri Srinivasa Minerals 10. LMM 11. Ramappa 12. Ganapathi 13. Hothur 14. Asghar Khan 15. Others
16) Supply illicit iron ore to exporters / domestic consumers/Stockyards : The illicit iron ore was supplied to the following companies/firms/persons (as indicated from the contents of Annexure 1 of Chapter-9): 1. ILC 2. SB Logistics 3. TB Logistics 4. SMSK (Kadri) 5. Arihant Tiles and Marbles 6. Continent Impex 7. Swastik Steels Hospet
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8. Alpine International 9. JSW Ltd 10. Satavahana Ispat Pvt Ltd 11. Kalyani Steels 12. RAYEEN Steels 13. Sajjala 14. Bhaskar KMMI 15. Others
The seized document show how the group planned and took over control of several iron ore mining leases. A number of Excel spreadsheets and pdf files contain details of planning, production and dispatches from these mines. Based on the analysis of the contents of these files, a table has been prepared that gives details about the mining leases that were taken control of, the front companies, the raising contractors, share in production cost, share in extracted material, illicit extraction and dispatch details, etc.
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Table 2 – Table showing details of mining leases that were taken control of, the front companies, the raising contractors, share in production cost, share in extracted material, illicit extraction and dispatch.
S Leases Front Raising Front % % Annual Extracted Extracti Dispatches Remarks/Illicit Iron ore No Companies Contractor Controlling Shar Share Quantit Qty on in Extracted and/or for signing Firm e in in y excess of Transported Agreement Prod Extrac Permitt permitte uctio ted ed for d n Iron Extract quantity Cost ore ion 1 MBT Sri Dushyant Devi 100% 50% 3 Lakh 506874 MT 68597 Dispatches do not match ML No 109 & Minerals/Ba Reddy - Enterprises MT (Oct 2008 - MT (Apr – ILC – 100349 MT (Aug 09) with Permits 2568 saveshwara Vijaya Oct 2009); Oct 2009) EAGLE – 4999 MT (Aug 09) Minerals Leasing ILC – 39079 MT (Oct 09) TOTAL – 190623 MT 368597 MT OTHERS – 46196 MT (Jan – (Apr-Oct Mar 2009) 2009) TOTAL – 190623 MT 2 TM ML No Sri Minerals RK Mining Devi 100% 50% 4 Lakh 423970 MT 23970 EAGLE – 187000 MT (Apr- Permits for only 112518 2315 & TMC /Basaveswa Enterprises MT (Apr – Dec MT (Apr – Dec 2009) MT were issued to TM ML No 1732 ra Minerals 2009) Dec ALPINE – 20977 MT (Apr – during the period Apr – 2009) Dec 2009) Dec 2009. No permits TM – 212512 MT (Apr – Dec were issued with EAGLE 2009) OR ALPINE as party. Hence the quantity TOTAL – 420490 MT 187000 MT transported to EAGLE and 20977 MT transported to ALPINE is illicit and 99994 MT transported on account of TM is illicit. TOTAL – 307971 MT 3 VENAG Anant Sena Devi 50% 50% 10 Lakh 311023 MT - Dispatches do not match ML No 2553 Reddy Enterprises MT (Jun-Dec EAGLE – 67283 MT (Jul – with Permits 2009) Dec 2009) ILC – 48740 MT (Jul -Dec TOTAL – 276979 MT 2009) RAMAPPA – 129723 MT (May-Dec 2009)
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Hothur – 15036 MT (Jul – Dec 2009) GANAPATHI – 16197 MT (Dec 2009)
TOTAL – 276979 MT
4 VEEYAM Dushyant Devi 50% 215838 Mine does not have MINES Reddy - Enterprises 215838* MT Lakh MT SMSK – 25682 MT (Nov-Dec requisite permissions to ML No 988 Vijaya (Oct 2009 - 2009) operate. Leasing May 2010) SBL – 42612 MT ( Nov –Dec No Permits have been *Annexure 2: 2009) issued after 2007-08. A/Madhu/1 TBSL – 989 MT (Nov – Dec ** 2009) TOTAL – 215838 Lakh DEVI ENTERPRISES – 46720 MT MT (Nov-Dec 2009)
SATHAVAHANA ISPAT LTD – 9669.98 MT (Jan – Feb 2010)
TOTAL – 125673 MT
5 DALMIA Yerribabu/ 1685302 LAM – 777262 MT (Apr-Dec Erstwhile Dalmia mine MINES Nanda 595070 MT MT 2009) does not have the Singh (Apr – Oct approval for mining. [**Stock 2009)** Details.xls TOTAL - 1685302 MT ***Annexure 1090232 MT 2: (Oct 2009 - A/Madhu/1] Jun 2010)***
TOTAL – 1685302 MT
5 Indian Mines Full Power Srinivasa Devi 169263 MT No permits were issued & Minerals of Attorney Reddy - Enterprises (Jul –Dec LAM – 28284 MT (Aug – Dec during Apr – Dec 2009. SHAIK SAB to Mahfouz Thirumala 2009) 2009) ML No 2572 Alikhan Conveyors MUNEER – 6808 MT (Nov – (Devi Dec 2009) TOTAL - 169263 MT
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Enterprises) BHASKAR KMMI – 4329 MT (Dec 2009) SAJJALA – 579 MT (Dec 2009) RAYEEN STEEL – 752 MT (Dec 2009)
TOTAL – 40752 MT
6 Devi 18 Lakh Lakshmi Enterprises MT 1948521 MT Seized documents Narayana (Nov 2009 - (Annexure 2) show that Mining Jun 2010) the Raising Contractor of Company this mine i.e. Vijaya ML No 2487 Leasing extracted the entire 1948521 MT of (Annexure 2 iron ore on behalf of M/s A/Madhu/1) Obulapuram Mining Company (OMC). Bank accounts confirm that the payment towards extraction of iron ore / formation of a new road, to Vijaya leasing Company was done by M/s Associated Mining Company. The entire mining activity is in violation of Rule 46 of Mineral Concession Rules 1960. Formation of new road in forest area is in violation of Forest Conservation Act & Other Acts. A FIR has been filed against the formation of new road (Annexure 13). The CEC is seized with the matter of illegal mining in LMC and adjoining encroached forest land.
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This extraction of iron ore should be seen in that context also.
TOTAL - 1948521 MT
7 JM Madhushree Srinivas Madhushree 40% 1.5 230681 MT 80681 80681 MT in excess of VRUSHABHE Enterprises Enterprises Lakh (May – Dec MT SSM – 176649 MT (May – permitted quantity NDRAIAH MT 2009) Dec 2009) extracted during May – ML No 2173 KIRLOSKAR – 30762 (May – Dec 2009. 249937 MT Oct 2009) dispatches do not match TO MAHARASHTRA – 16173 the Permits. MT (Jun – Oct 2009) In 2008, this mine was KALYANI – 1340 MT (Dec closed due to 2009) encroachment and MADHUSHREE – 25011 MT extraction of iron ore (Jun – Dec 2009) from adjoining forest land. The matter went to TOTAL – 249937 MT Hon’ble High Court and Hon’ble High Court directed that the Lessee may be allowed to do mining in undisputed area. In the said mine there is hardly any deposit of iron ore in the undisputed area. Therefore the extraction of iron ore as shown here is suspected to have been carried out in the disputed area. Presently survey is underway under orders of Hon’ble Supreme Court and the matter needs to be seen in this context also.
TOTAL – 249937 MT
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8 HT/HM Dushyant Madhushree 50% 5 Lakh 147473 MT SAJJALA – 130 MT ML No 2548 Reddy - Enterprises MT (Jan - Aug Dispatch for 130 MT Vijaya 2009) does not match Permits
Leasing TOTAL - 130 MT
It is to state here that M/s Hind Traders was involved in illegal transport of iron ore from his mine to an unauthorized stockyard and then onward supply to various destinations. Approximately 70,000 MT iron ore has been seized in this regard from this stockyard. The Deputy Director Mines has replied that no permits were obtained by the lessee for this quantity. Also no forest permits were issued. The quantity other than 70,000 MT which has gone illegally is not known. In spite of more than 2 years no action has been taken against the lessee. The entire operations in this mine should be seen in this context.
9 Yerri Babu Lakshmi 50% 5 Lakh 1347932 MT 847932 NEB A BLOCK 847932 MT of iron ore in SVK NEB Aruna MT (Apr-Dec MT EAGLE – 164066 MT (Jun- excess of permitted RANGE A Minerals 2009) Nov 2009) quantity extracted. Block ILC – 50070 MT (Jun – Nov Permits for only 20000 (indicating SB 2009) MT were issued with Sri Minerals ML SBL – 4089 MT (Dec 2009) Krishna Minerals as No 2550 SKM – 208195 MT (May – Party. The remaining Jaisingpur) Dec 2009) 1233964 MT do not
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SAJJALA – 588 MT (Apr – match with permits Nov 2009) Y MINERALS, NIRMAL JAIN, TOTAL – 1233964 MT. 10 Yerri Babu Lakshmi 50% SHAFIQ, SBL, AJGHAR SVK NEB Aruna KHAN & OTHERS – 488532 RANGE B Minerals MT (Jul – Dec 2009) Block NEB B BLOCK (indicating SB SWASTIK – 198000 MT (Oct - Minerals ML Dec 2009) No 2550 JAMMUNATH – 140424 MT Jaisingpur) (Sep – Dec 2009)
TOTAL – 1253964 MT 11 SVK NEB 20 Lakh 549704 RANGE MT 2549704 MT MT LMM – 448881 MT (Apr – 549204 MT extracted in Vyasankere (Apr –Dec Dec 2009) excess of the permitted (SB Minerals 2009) OTHERS – 1713873 MT (Apr quantity. Permits for only ML No 2515) – Dec 2009) 1041968 MT were issued during the period Apr – TOTAL – 2162754 MT Dec 2009. Hence the remaining quantity 1120786 MT is illicitly transported. TOTAL - 1120786 MT
12 RAJAPURA Partners Extraction and dispatch MINES Madhu details are not available ML No2190 Kumar in the seized files. Varma (Madhushre e Enterprises)
13 KM 100% Extraction and dispatch PARVATHAM details are not available MA in the seized files. ML No 2514
14 M MANSOOR 65% Extraction and dispatch AHMAD details are not available ML No 2616 in the seized files.
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15 50% 39078 MT Extraction and dispatch N details are not available RATNAYAIAH in the seized files.
16 50% Extraction and dispatch DECCAN details are not available MINING in the seized files. SYNDICATE ML No 2525
GRAND TOTAL 7399314 MT Source: Annexure 1: Stock Details.xls, V-NAG Dec-09.xls, V.M DEC-09.xls, TM Dec-09.xls, I.M.M Dec 09.xls, V.R.U Dec-09.xls, v.m_sathava(1).xls, T.M Dec-09.xls, S.V.K NEB A BLOCK DEC-09.xls, S.V.K NEB B BLOCK DEC-09.xls, S.V.K.V Dec-09 xls); Annexure 2: A/Madhu/1 Page 14-15
The Total Cost of 73,99,314 MT of Illicit Iron ore @ Rs 2500/MT is Rs 1849,82,85,000/- (around Rs 1850 Crores)
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17) A few excel and pdf. files found in Annexure 1 of Chapter 9 (Alikhan files) are analyzed as below:
(1) Excel File “Stock Details.xls”
Excel file “Stock Details.xls contains details of various mines that were controlled by the “group”, “commitments and movements” of iron ore, production and share of the “group” out of extracted iron ore and dispatches to various parties. The planning of operations is clearly detailed in spreadsheet “Permitted Quantity”. Spreadsheet “message” details planned production per day for various mines and “OUR PORTION” indicating share of the group out of extracted quantity. Further the spreadsheet contains, commitments of a few companies of the “group” viz “OMC” (Obulapuram Mining Company) and AMC (Anantpur Mining Company) towards various parties. The spreadsheet is reproduced hereunder for clarity and reference.
Table 3: Spreadsheet “message” in File “Stock Details.xls” MBT PRODUCTION FOR THE DAY 2,658
FOR THE MONTH 38,948 ------MBT DESPATHCES-ILC FOR THE DAY 1,574 TM PRODUCTION FOR THE DAY NIL FOR THE MONTH 1307.54 ------TM DESPATHCES-EAGLE
FOR THE DAY NIL VENAG-PRODUCTION
FOR THE DAY 3,215
FOR THE MONTH 15,947 ------
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PER DAY OUR PORTION MBT 3000 1500 HM 1000 500 TM 2000 1000 VENAG 3000 1500 NEB A BLOCK 3000 1500 NEB B BLOCK 6500 3250 VRUSHABENDRA 2500 1000 SVK 12000 5400 VEEYAM 5000 2500 SHAIK SAB 1500 1125 LMC TOTAL 39500 19275 COMMITMENTS AMC ARIHANT 40500 OMC CHENNAI JD-FINES 6000 CHENNAI JD-LUMPS 5000 PRATHYUSHA 30000 ILC INDUSTRIES 125000 1.5 MILLION UPTO JSW - PER DAY 12500 FEB'10
(2)Excel File “Port wise_details.xls “
Computer file “”Portwise_details.xls” (Table 4) contains a spreadsheet named “ILC-Final” among others. The spreadsheet has details of calculation for arriving at ex-mine price of iron ore, permit risk amount etc and shipment quantity exported from Krishnapatnam port during July-Oct 2009.
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Table 4- details of calculation for arriving at ex-mine price of iron ore, permit risk amount etc and shipment quantity exported from Krishnapatnam port during July-Oct 2009
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K>>E dK>/&d />ͲYhEd/dz d/>^ D/E ^ KDD/dD Ed ^Wd, Yh>E YhEd/dz KD >K< KD ϱϬ͕ϬϬϬ ϱϬ͕ϬϬϬ Ͳ >K< ϱϬ͕ϬϬϬ ϯϬ͕ϭϬϭ ϭϵ͕ϴϵϵ dKd> ϭ͕ϬϬ͕ϬϬϬ ϴϬ͕ϭϬϭ ϭϵ͕ϴϵϵ
ϵ͕ϳϰ͕ϵϱ͕ϳϮϬ KD ϭ͕ϬϬ͕ϬϬϬ ϭ͕ϬϬ͕ϬϬϬ Ͳϵ͕ϳϰ͕ϵϱ͕ϳϮϬ s E' ϯϭ͕ϯϴϵ ϯϭ͕ϯϴϵ Ϯ͕ϳϱ͕ϬϬ͕ϬϬϬ sz^E< Z ϲϱ͕ϬϮϵ ϲϱ͕ϬϮϵ ͲϭϮ͕ϰϵ͕ϵϱ͕ϳϮϬ dKd> ϭ͕ϵϲ͕ϰϭϴ ϭ͕ϵϲ͕ϰϭϴ Ͳ Ϯϰ͕ϯϵ͕ϵϱ͕ϳϮϬ
s E' ϳ͕ϰϳϭ Ͳϳ͕ϰϳϭ Dd ϭ͕ϬϬ͕ϬϬϬ ϭ͕ϬϬ͕ϯϰϵ Ͳϯϰϵ KD ϭ͕ϬϬ͕ϬϬϬ ϭ͕ϬϬ͕ϬϬϬ Ͳ sz^E< Z ϱϬ͕ϬϬϬ ϳϮ͕ϵϳϲ ͲϮϮ͕ϵϳϲ
Ϯ͕ϱϬ͕ϬϬϬ Ϯ͕ϴϬ͕ϳϵϲ ͲϯϬ͕ϳϵϲ
Report Page 141 of 464
WZKWK^ &/E> /> ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ ϲͲKĐƚͲϬϵ WĂƌƚŝĐƵůĂƌƐ &ŝŶĞƐ &ŝŶĞƐ &ŝŶĞƐ ůƵŵƉƐ &ŝŶĞƐ &ŝŶĞƐ &ŝŶĞƐ &ŝŶĞƐ /͘ ǀŐ^ĞůůŝŶŐWƌŝĐĞĂƐŽŶϭͲϳͲϬϵ ϳϬ͘ϬϬ ϲϴ͘ϬϬ ϲϴ͘ϬϬ ϲϴ͘ϬϬ ϲϳ͘ϬϬ ϲϳ͘ϬϬ ϳϰ͘ϬϬ ϴϬ͘ϬϬ Zd K&KEs Z^/KE ϰϲ͘ϱϬ ϰϳ͘ϬϬ ϰϳ͘ϬϬ ϰϳ͘ϬϬ ϰϳ͘ϬϬ ϰϲ͘ϱϬ ϰϲ͘ϮϬ ϰϲ͘ϮϬ //͘ ǀŐŽŶǀĞƌƐŝŽŶΛZƐ͘ϰϴ ϯ͕Ϯϱϱ ϯ͕ϭϵϲ ϯ͕ϭϵϲ ϯ͕ϭϵϲ ϯ͕ϭϰϵ ϯ͕ϭϭϲ ϯ͕ϰϭϵ ϯ͕ϲϵϲ
///͘ ŽƐƚŽĨ^ŚŝƉŵĞŶƚ͗ dƌĂŶƐƉŽƌƚĂƚŝŽŶ LJZŽĂĚ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ LJZĂŝů Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ ǀŐdƌĂŶƐƉŽƌƚĂƚŝŽŶŽƐƚ ϭ͕ϭϬϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ ϭ͕ϭϱϬ WŽƌƚŚĂƌŐĞƐ ϭϴϱ ϭϴϱ ϭϴϱ ϭϴϱ ϭϴϱ ϭϴϱ ϭϴϱ ϭϴϱ ZĞŶƚ;ZƐ͘ϰϰůĂĐƐƉŵͿ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Ͳ Θ& ϵϬ ϵϬ ϵϬ ϵϬ ϵϬ ϵϬ ϵϬ ϵϬ tŚĂƌĨĂŐĞ ϯϱ ϯϱ ϯϱ ϯϱ ϯϱ ϯϱ ϯϱ ϯϱ džƉŽƌƚƵƚLJΛϱй Ͳ Ͳ Ͳ ϭϲϬ Ͳ Ͳ Ͳ Ͳ ,ĂŶĚůŝŶŐ>ŽƐƐΛϯй ϵϴ ϵϲ ϵϲ ϵϲ ϵϰ ϵϯ ϭϬϯ ϭϭϭ DŽŝƐƚƵƌĞ ϵϴ Ϯϭϰ ϭϱϭ ϭϬϯ ϭϰϵ ϭϭϯ ϭϬϯ ϭϭϭ ŶĂůLJƐŝƐĐŚĂƌŐĞƐ >ŽĂĚŝŶŐƉŽŝŶƚ ϭ ϭ ϭ ϭ ϭ ϭ ϭ ϭ ZĞĐĞŝǀŝŶŐƉŽŝŶƚ ϭ ϭ ϭ ϭ ϭ ϭ ϭ ϭ sĞƐƐĞů>ŽĂĚŝŶŐ ϭ ϭ ϭ ϭ ϭ ϭ ϭ ϭ ĞƐĐŚĂƌŐĞWŽƌƚ ϲ ϲ ϲ ϲ ϲ ϲ ϲ ϲ /YZ/^< ϱϬ ϱϬ ϱϬ ϱϬ ϱϬ ϱϬ ϱϬ ϱϬ DŝƐĐ džƉ ϭϬ ϭϬ ϭϬ ϭϬ ϭϬ ϭϬ ϭϬ ϭϬ &ŝŶĂŶĐŝĂůŚĂƌŐĞƐΛϬ͘ϱϬй ϭϲ ϭϲ ϭϲ ϭϲ ϭϲ ϭϲ ϭϳ ϭϴ DZ'/E ϭϴϲ ϭϴϴ ϭϴϴ ϭϴϴ ϭϴϴ ϭϴϲ ϭϴϱ ϭϴϱ ϭ͕ϴϳϳ Ϯ͕Ϭϰϰ ϭ͕ϵϴϬ Ϯ͕Ϭϵϯ ϭ͕ϵϳϳ ϭ͕ϵϯϴ ϭ͕ϵϯϳ ϭ͕ϵϱϱ
/s͘ ǀŐ džͲŵŝŶĞƐƉƌŝĐĞ ϭ͕ϯϳϴ ϭ͕ϭϱϮ ϭ͕Ϯϭϲ ϭ͕ϭϬϯ ϭ͕ϭϳϮ ϭ͕ϭϳϴ ϭ͕ϰϴϮ ϭ͕ϳϰϭ
WhZ,^ dyK^d ϲϬ ϳϮ ϳϮ ϳϮ ϳϮ ϳϮ ϳϮ ϳϮ W ZD/dZ/^< ϳϱ ϳϱ ϳϱ ϳϱ ϳϱ ϳϱ ϳϱ ϳϱ ϭϯϱ ϭϰϳ ϭϰϳ ϭϰϳ ϭϰϳ ϭϰϳ ϭϰϳ ϭϰϳ
s ^ >>/E'WZ/ ϭ͕Ϯϰϯ ϭ͕ϬϬϱ ϭ͕Ϭϲϵ ϵϱϲ ϭ͕ϬϮϱ ϭ͕Ϭϯϭ ϭ͕ϯϯϱ ϭ͕ϱϵϰ ϭ͕ϭϰϱ s/ YhEd/dz yWKZd ϯ͕ϱϬ͕ϬϬϬ ϰϰ͕ϬϬϬ ϯϭ͕ϬϬϬ ϰϬ͕ϬϬϬ ϰϴ͕ϴϱϲ ϰϱ͕ϰϮϱ ϱϱ͕ϬϬϬ ϰϱ͕ϳϭϵ ϯ͕ϭϬ͕ϬϬϬ ϰϬ͕ϬϬϬ ϰϯ͕ϱϬ͕ϱϬ͕ϬϬϬ ϰ͕ϰϮ͕ϮϬ͕ϬϬϬ ϯ͕ϯϭ͕ϯϵ͕ϬϬϬ ϯ͕ϴϮ͕ϰϬ͕ϬϬϬ ϱ͕ϬϬ͕ϳϳ͕ϰϬϬ ϰ͕ϲϴ͕ϯϯ͕ϭϳϱ ϳ͕ϯϰ͕Ϯϱ͕ϬϬϬ ϳ͕Ϯϴ͕ϳϲ͕Ϭϴϲ ϯϱ͕ϭϲ͕ϬϬ͕ϰϲϭ ϰ͕ϱϴ͕ϬϬ͕ϬϬϬ s// DKhEd ϱϬ ϰϲ ϵϲϵϳϳϭϵϬ ϰϲ DKhEd' ϰ ϴϵϳϲϲϵϵϬ ϯϱ ^ dd> ϳϮϭϬϮϬϬ ϭϭ sE DKhEdh Ͳϯ͘ϰϳ DKhEd'/s E Ͳϳ͘Ϯϱ >E dK'/s ϭϬ ϭϱd,KdΖϬϵ YhEd/dz&/E>/ ϱ ϭϭͲEŽǀͲϬϵ YhEd/dz>/&d ϱ ϭϯͲEŽǀͲϬϵ >E dK>/&d
K>>E dK>/&d
KD >K<
ϵ͕ϳϰ͕ϵϱ͕ϳϮϬ Ͳϵ͕ϳϰ͕ϵϱ͕ϳϮϬ Ϯ͕ϳϱ͕ϬϬ͕ϬϬϬ ͲϭϮ͕ϰϵ͕ϵϱ͕ϳϮϬ Ϯϰ͕ϯϵ͕ϵϱ͕ϳϮϬ
The shipment details relate to the quantity committed to ILC as detailed in spreadsheet “COMMITMENTS & MOVEMENTS” of file “Stock Details.xls. The shipment quantities mentioned in the spread sheet are verified with the actual export shipments of M/s ILC Ltd from Krishnapatnam port during July – Oct 2009 from Customs data. Further it is to be noted that in Table 4, a permit risk amount of Rs 75 / MT of iron ore is mentioned in the calculations. “Risk Material / Zero Material” refers to iron ore that is illegally extracted, transported and traded. “Risk Amount” is the amount paid to facilitate safe transport to destination. In view of the above, it
Report Page 142 of 464
is clear that the export shipments of M/s ILC Ltd from Krishnapatnam port during the said period comprised of illegal iron ore. Payments for the iron ore from ILC to group companies like Devi Enterprises, Sree Minerals, AMC etc are verified from their bank accounts. The payment details are containing in a separate file named “PHANI.xls” as discussed below:
(3)Excel File “PHANI.xls”
The file named ‘PHANI.XLS’ contains details of payments made by M/s ILC Ltd against 1,00,000 MT, 1,96,440 MT and 2,50,000 MT of iron ore. The spreadsheet is reproduced in the following pages: (Table 5). From the table, it is to be noted here that 75% of the total value is paid through cash and 25% is paid through the Banks. The concerned enforcement agencies should take note of it for further investigation.
Report Page 143 of 464
Table 5 - Details of payment etc. of ILC OLD ACCOUNT ILC- PAYMENTS OLD ACCOUNT 1LAKH ,OMC & A BLOCK PARTY QTY RATE/MT C BILL AMOUNT DATE MODE AMOUNT PORTION OMC 50000 1200 600 600 60000000 15 June CHEQUE DEVI 2009 2.40 ENTERPRISES A BLOK 50000 1000 1000 0 50000000 24 June RTGS MADHU 2009 0.60 16 June C 2009 2.40 23 June C 2009 2.00 27 June C 2009 2.00 03 July C 2009 1.60
TOTAL 110000000 TOTAL PAID 11.00 DUE NIL AMOUNT 33000000
NEW ACCOUNT ILC- PAYMENTS FOR 196440 MT PARTY QTY RATE/MT C BILL AMOUNT DATE MODE AMOUNT PORTION
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AMC/OMC 100000 1000 25% 100000000 03 July C 2009 3.00 V NAG 50000 1000 25% 50000000 10 July C 2009 5.00 VYSANKERE 150000 1000 25% 150000000 19 July C 2009 2.00 14 July RTGS AMC 2009 1.75 15 July RTGS DEVI 2009 2.00 20 July RTGS SREE MINERALS 2009 1.00 31 July RTGS DEVI 2009 2.75 09 August C 2009 5.00 11 August C GIVEN TO RAVI 2009 2.00 KALYAN TOTAL PAID 24.50 DUE NIL AMOUNT ILC- PAYMENTS FOR 250000 MT TOTAL DUE 60.00 DATE MODE AMOUNT 18 August C 2009 10.50
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18 August RTGS DEVI 2009 3.40
TOTAL PAID 13.90
BALANCE DUE 46.10
C 75% 34.58 RTGS 25% 11.53
TOTAL AMOUNT DUE 95.50 AMOUNT GIVEN 49.40 BALANCE TO RECEIVE
C 75% 34.58 RTGS 25% 11.53 46.10
Report Page 146 of 464
In the table, for quantities 50,000 MT it is mentioned that the rate/MT is 1200. (Table 5) Out of this “C portion”( indicating Cash portion) is Rs 6 crores while “Bill ”(indicating bank transaction) is Rs 6 crores. In few other cases entire receipts have been shown against “C portion” while in few other cases “bill” portions have been shown as merely 25% .Thus it is clear that only a small portion of the receipts is in the form of bank transactions and a large chunk of the receipts is obtained in the form of “Cash”.
In the “mode” column (Table 5) entries have been made showing RTGS, Cheque, C(indicating Cash). In case of payments through RTGS and Cheque modes names of parties i.e. Devi Enterprises, Madhu, Sree Minerals, AMC who had received the payment along with the dates are provided. On verifying the bank accounts of the parties shown in the statements Devi Minerals (A/c No 202011012661 ING Vysya Bank Bellary), Sree Minerals (A/c No 267010200007733 Axis Bank Bellary) and AMC (Anantpur Mining Corporation A/C No 267010200001694, Axis Bank, Bellary), it is found that the money was received on the dates mentioned. Further the ILC Ltd Bank A/c No 10820656534 SBI shows transfer of Rs 60 Lakhs to A/c No 0010444917121 of SBI dated 24/06/2009 with remarks “adv fr bal 10000 mts”. A/c No 0010444917121 in SBI belongs to Obulapuram Mining Company. This confirms payment of Rs 60 Lakhs on the same date mentioned against “Madhu” in the seized document.
The above mentioned documents establish that Devi Enterprise, Madhushree Enterprises, Sree Minerals, Obulapuram Mining Company are receiving the payments.
Report Page 147 of 464
Further a large chunk of payments is made in the form of Cash.
(4)Excel file “V-NAG DEC-09”:
“Dispatch” spread-sheet shows that High Grade calibrated ore of 336.99 MT, from V Nag Mines was dispatched on 2nd of Dec 2009 through 15 trucks to Belekeri under the heading “MADHU SHREE A/C TO ILC”.
Similarly it has been shown that Low grade iron ore of 706 MT was dispatched through 33 trucks on 4th Dec 2009 to Belekeri.
When this data was compared with the electronic data seized from Shri Mallikarjun Shipping Private Limited (SMSPL) Belekeri, it has revealed that 15 trucks have brought 331.9 MT calibrated Ore(High Grade) under the account ILC NAGAPPA from 2nd Dec to 5th Dec 2009 to Belekeri. Similarly with regard to Low grade fines, seized data of SMSPL has revealed that from 5th to 8th Dec 2009 579 MT of LG iron ore was received under the account ILC NAGAPPA. Further dispatches were made on 15 Dec 2009 & 16 Dec 2009 of 11 and 83 trucks carrying 229.93 MT and 1781.76 MT respectively and the dispatched iron ore was received at SMSPL plot in Belekeri against ILC NAGAPPA account. There are no permits issued for V Nagappa mine (Shanthalakshmi Jairam, ML No. 2553) for Belekeri in the said period, clearly indicating that the iron ore extracted and dispatched is illicit.
The total production for V Nag mine for the period April 2009 to 16th Dec 2009 is shown in the “Summary” spread
Report Page 148 of 464
sheet as 3,11,023.04 MT while the total dispatches under various heads like Madhushree A/C dispatches (Eagle A/C & ILC A/C),Ramappa A/C dispatch, Hothur A/C dispatch and Ganapathi A/C dispatch is around 2,76,979 MT.
It is pertinent to note the said lessee was issued permit for a quantity of 1,05,000 MT during May, June and July 2009 out of which 70,000 MT were surrendered. Further the dispatches do not match with the permits issued with regard to party, grade and destination for the said period. Thus the entire dispatched iron ore is illicit.
It is observed during this investigation that Mineral Dispatch Permits (MDPs) are obtained for a quantity by paying the royalty. The same permits are kept unused and the transportation goes on (since there is no check for these mines). After the expiry of permit date, these MDPs are surrendered and new permits are obtained by adjusting the royalty. This mine is one example of this practice.
The following table shows permits issued and surrendered by this lease during the period 2009-10.
Table 6 – Details of Permits Issued and Surrendered by Nagappa Mine (Shanta Lakshmi Jairam ML No 2553) during 2009-10
Date of Date of SL Permit Issue of Surrender of Quantity * (MT) No Number Permit Permit 1 915 06-07-2009 10000 2 915 29-07-2009 -10000 3 916 06-07-2009 20000 4 916 29-07-2009 -20000 5 917 06-07-2009 15000 6 917 29-07-2009 -15000
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7 918 06-07-2009 25000 8 918 29-07-2009 -25000 9 144062 15-03-2010 24992 10 144062 04-05-2010 -2592 11 144063 15-03-2010 32000 12 144063 04-05-2010 -21472 13 144064 15-03-2010 18000 14 144064 04-05-2010 -18000 * Quantity surrendered is shown as negative.
(5)Excel file “V.R.U DEC-09”:
“PRODUCTION & DISPATCH” spread-sheet has shown iron ore fines of 13,623.44 MT dispatched from JM Vrushbendraiah mines for “SSM” (indicating Sri Srinivas Mineral Trading Company) to Belekeri from 2nd Dec to 15th Dec 2009 through 633 trucks.
When this data was compared with the electronic data seized from the Adani Enterprises Private Ltd. Belekeri it has revealed that between dates 3 Dec 2009 to 17 Dec 2009 total of 639 trucks carrying total of 13661.83 MT of Iron ore fines were received at Belekeri in the name of the supplier Sri Srinivas Minerals Trading Co. i.e. SSM
Moreover during the said period no permits were issued from JM Vrushbendraiah mine Lease to Belekeri .
In the “Summary” spreadsheet the total production for JM Vrushbendraiah mine for the period April 2009 to 16th Dec 2009 is shown as 2,30,681.14 MT and the total dispatches under various heads like SSM A/C and Madhushree A/C is around 2,50,000 MT to places like Karwar, Krishnapatanam, Mangalore, Belekeri, Kirloskar, Maharashtra and Kalyani. Out of this quantity, around
Report Page 150 of 464
67,000 MT of iron ore is shown to have been dispatched to Krishnapatnam port on account of SSM (Sri Srinivas Mineral Trading Company).
All these dispatches do not match with the permits issued with regard to party, grade and destination for the said period. Thus the entire dispatched iron ore is illicit. Further, as per the Customs data, Sri Srinivas Mineral Trading Company (Exporter IEC No 0703011189) has exported 80,000 MT of iron ore from Krishnapatnam port during 2009 and this iron ore is suspected to be illicit.
M/s Madhushree has bank account no 202011012670 in ING Vysya Bank. Statement of account for this bank account shows a receipt of Rs. 80,00,000 on 11/09/2009 through Cheque No 731981 State Bank of India from bank account of Sri Srinivasa Mineral Trading Company. (Annexure 14 of Chapter-9 of Dr.U.V. Singh’s Report)
(6)Excel file “V.M DEC-09”:
The “Summary” and “Dispatch” spread sheet of the file has mentioned 1,84,680 MT of production from VM mines for the period Oct 2009 to Dec 2010. Dispatch has been shown against “Eagle A/C” and “Devi A/C” to destinations like Kalyani, Gujarat, Belekeri, Krishnapatanam, JSW, etc with bifurcation against traders/exporters i.e. SMSK, SBL, TBSL.
The iron ore has been shown as dispatches to various parties in account of Eagle and Devi as given below: • Eagle A/c – SMSK, SBL, TBSL • Devi A/c – JSW
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Veeyam Mines has not been issued any permits after 2007-08. Thus the entire mining operation is illegal.
The Bank Account of M/s Eagle Traders and Logistics (Acc No 267010200007740 in Axis Bank Bellary) shows credit of money to Eagle from SB Logistics, TBS Logistics and SMSK during the said period, clearly establishing that the above illicit extraction and transportation did take place.
(7)Excel file “v.m_sathava(1)”:
The “Sheet 1” spread sheet has mentioned truck wise details of the iron ore dispatched for 9,669.98 MT from 09/01/2010 to 04/02/2010 under the heading “Devi Minerals to Sathavahana Ispat Limited” from Veeyam Mines The Excel file “Bill1” also contains iron ore dispatch statement from 09/01/2010 to 04/02/2010. Veeyam Mines has not been issued any permits after 2007-08.
Moreover there is no permit issued to destination Sathavahana Ispat Limited, with Devi Enterprises as party. Thus the entire mining operation is illegal and 9.669.98 MT of dispatched iron ore is illicit.
M/s Devi Enterprises has bank account no 202011012661 in ING Vysya Bank. Statement of account of this bank account shows a receipt of Rs 6,37,50,000 from Satavahana Ispat (State Bank of Hyderabad) on 23/03/2010. It is suspected that this money is the payment for illicit iron ore supplied from M/s Devi Enterprises. In addition Rs 9.533 Crores have also been received from the Sathavahana Ispat Limited ( Bank of Nova Scotia, Banjara Hills Hyderabad) vide
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9 different transactions between 17/02/2010 and 19/04/2010, into the ING Vysya Account of Devi Enterprises.
(8)Excel file “T.M Dec-09”:
The “Party wise Summary” spread sheet has mentioned dispatch of 2,07,978.44 MT of iron ore, for the period from April 1, 2009 to 16th Dec 2009, against Devi’s a/c shown against traders/exporters namely Eagle and Alpine. All these dispatches do not match with the permits issued with regard to party, grade and destination for the said period. Thus the entire dispatched iron ore is illicit. Further, in the same file, 2,12,512.31 MT of iron ore has been shown against the “TM A/C dispatch”. Against this the permit issued, for the same period, with regard to Trident Mineral is 1,12,518 MT. This implies that 99,994.31 MT of iron ore was transported illicitly.
Hence a total of 3,07,972 MT of iron ore was illicitly transported from Trident Minerals during Apr – Dec 2009. This mining might have been done in the encroached area by shifting the boundary towards the old Dalmia mines.
(9)Excel files “Stock Details” and “JULY’09”
Excel file “Stock Details” spreadsheet “Stock” and “Permitted Quantity” mentions RK Mining as a Raising Contractor for TM and TMC Mines. Further Excel file “Stock details” spreadsheet “R K Mining” details payments to R K Mining at the rate of Rs250/MT against excavation charges, crushing & screening, waste handling charges and transportation of 4,18,485.82 MT in TM Mine.
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Excel file “JULY’09” contains a Statement of Account of Devi Enterprises (ING Vysya Bank A/C No 2020- 202011012661-CD) for the period July 2009. The statement of Account shows a payment of Rs 48,86,700 to RK Mining. The transaction is confirmed from the Devi Enterprises Statement of account in ING Vysya. Payments to the Raising Contractor of TM Mines by Devi Enterprises is a further proof that TM Mine was controlled by the “group”
(10) Excel Files S.V.K NEB A BLOCK Dec-09.xls & S.V.K NEB B BLOCK Dec-09.xls The file S.V.K NEB A BLOCK Dec-09.xls & S.V.K NEB B BLOCK Dec-09.xls contains details of production and dispatch from S.V.K NEB A & B BLOCK (SB Minerals ML 2550 Jaisingpur) during Apr – Dec 2009. The details in this file have to be read with details of production and dispatch in this mine mentioned in file Stock Details.xls. The details show that 12,53,964 MT of iron ore was dispatched to various parties during Apr – Dec 2009 and out of this quantity dispatches of 12,33,964 MT of iron ore did not match with permits.
Further, both files show dispatches on LAM (indicating Lakshmi Aruna Minerals) account. The spreadsheet mentions the details under heading “SVK NEB B BLOCK ROM REPORT LAM (Dal) (indicating iron ore is extracted from erstwhile Dalmia Mines). This is confirmed from details of production in this mine mentioned in the file “Stock Details.xls, spreadsheet: NEB Range”. The production from “Dalmia” (erstwhile Dalmia Mine) has been shown as 5,71,160 MT during Apr – Aug 2009. The erstwhile Dalmia mine did not
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have the approval for mining. The transferee of Dalmia Cements has made complaints to Mines and Forest departments for illegal removal of iron ore from the said mine. The CEC also in its recent report has stated that large scale illicit mining has taken place in the erstwhile Dalmia mine. The matter is under further investigation. It is further observed from the electronic data that the entire illicit iron ore extracted from “Dalmia” mine has been shown against the LAM (Lakshmi Aruna Mineral) A/C. The transportation of this iron ore has been shown to be done by Swastik and Jambunath.
(11) Excel File S.V.K.V Dec-09.xls
The file S.V.K.V Dec-09.xls contains details of production and dispatch from S.V.K Vyasankare (SB Minerals ML 2515) during Apr – Dec 2009. The file shows a production of 25,49,704 MT and a dispatch of 21,62,754 MT of iron ore during the said period. Dispatches have been shown against LMM and Others. Further party wise dispatches from LMM account are shown to JSW, Eagle and ILC. Permits for only 1041968 MT were issued during the period Apr- Dec 2009. Hence the remaining 11,20,786 MT is illicitly transported.
12. Excel file “I.M.M DEC-09” The file contains information on production and dispatch of iron ore for the period July - Dec 2009 to various destinations like Sajjala, Bandari, Rayeen steels, Koppal etc. The iron ore has been shown against two accounts i.e. LAM (Lakshmi Aruna Minerals) and Muneer.
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On verification of the permit data it was found that the Shaik Saab i.e. IMM mines has not been issued any permit in the period mentioned above clearly indicting that entire mining operation in Shaik Saab/IMM mine was illegal.
The dispatches have been shown against LAM (Lakshmi Aruna Minerals), MUNEER, Bhaskar KMMI, SAJJALA and RAYEEN Steel.
The total production during Jul – Dec 2009 was 1,69,263.35 MT where as total dispatches were 40,754 MT. No permits were issued during Apr – Dec 2009. Hence the entire production of 1,69,263 MT and dispatch of 40,754 MT is treated as illicit.
13. File A/Madhu/1 pages 18-19 (Annexure-2 of Chapter-9) On analysis of the hard copy of document seized by Income Tax Department under heading “Details of Production in L.M.C Mine”, it is noted that the concerned contractor has made bills for production in LMC mine and has mentioned “diesel issues to OMC” and has also shown payments to have been received from OMC through RTGS and other modes.
The hard copy of the seized documents show “received amount” on various dates through modes like RTGS, cheque etc. The document shows that: “ received amount (12.04.10) RTGS(OMC) - Rs 3 Crores received amount(20.04.10)RTGS(OMC) - Rs 3 Crores received amount(15.05.10)RTGS(OMC) - Rs 10 Crores received amount(1.06.10)RTGS(OMC) - Rs 2 Crores received amount(3.06.10)RTGS(A.R. Udyog) - Rs 1 Crore ”
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The bank statements of OMC were checked for these payments indicated above. OMC bank statements did not reflect receipt of the money on the mentioned dates. However, on verifying with the SBI 3003 account of the Associated Mining Company it was found that on the same dates as mentioned above Rs 3 Crores, Rs 3 Crores, Rs 9.95 Crores and Rs 1.96 Crores have been transferred to Vijay Mining and Infra while Rs. 1 Crores has been transferred to A.R. Udyog. This indicates a deliberate attempt to obfuscate the money trail by diverting money transfers through layering.
This clearly indicates that part LMC and adjoining forest land was controlled and managed by the “group”.
It may be noted that as per seized files in Annexure 1 of Chapter-9 and explained in Table 2, a total of 19,48,521 MT of iron ore was illicit extracted from Lakshmi Narayana Mines during Nov 2009 – Jun 2010.
14. File A/Madhu/1 pages 14-15 (Annexure-2 of Chapter-9):
Examination of hard copy of the document seized by Income Tax Department containing heading “V M Mines, Balance after Negotiations”, shows that between 25/10/09 and 31/05/10, a production of 2,15,838 MT in VM mines and 9,83,162 MT( 6,30,482 MT and 3,52,680 MT) in DM Mines. DM Mine indicates erstwhile Dalmia Mine whereas VM Mine indicates VEEYAM Mine. Further for the period 01/06/10 to 30/06/10, a production of 1,07,070 MT (59,536 MT and 47534 MT) of iron ore has been mentioned against DM mines.
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There were not permits for VM (VEEYAM) Mine during the said period. Hence the entire iron ore quantity of 2,15,838 MT produced from VM Mine was illicit.
DM mine i.e. erstwhile Dalmia mines is adjacent to the VM mine. Erstwhile Dalmia Mine does not have necessary clearances for operation and hence the entire quantity of 10,90,232 MT of iron ore produced from erstwhile Dalmia Mine was illicit.
15. Excel file “Salaries -09” and “Salaries -2010”
This file contains information like salary payment to mine boys, names of the employees, mobile numbers of the employees, professional tax details etc.
The employees have been shown against three firms i.e. Devi Enterprise, Madhushree Enterprises and Lakshmi Aruna Minerals.
The salary statements contain names of the mines and the names of the three firms against these employees. This indicates that the employees were hired by the firms to run the operations in the mentioned mines. These mines include TM & TMC, MBT, VM, HM, IMM Shaik Saab, Laxmi Narayan Mines (LMC), Vrushabendraiah, SVK NEB range, SVK Vysankere and VENAG.
This clearly indicates that the three firms were managing and controlling the said mining leases and had engaged man power for this purpose. The payment of professional tax for these employees as calculated in the salary statement by Devi
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Enterprises and Madhushree Enterprises has been confirmed from their bank accounts in ING Vysya Bank.
16. Excel files “ GROUP VEHICLES 1” and “Vehicle details 1”: The files contain vehicles details of Devi Enterprises, Madhushree Enterprises, Laxmi Aruna Minerals and OMPCL. The details contain particulars like renewal, payment of road tax, FC, New vehicles, Life tax, Vehicle sales etc.
Further, a spread sheet “New Vehicles” in file “GROUP VEHICLES 1” contains detail of vehicle, a Land Cruiser V8 with Reg No. KA-34-M-8154. The owner of the vehicle is shown as Shri G J R Sir (indicating Shri G Janardhan Reddy, one of the Directors of Obulapuram Mining Company). Extract of the Registration Certificate particulars of the vehicle bearing Reg. No.KA 34 M 8154 confirms that Gali Janardhana Reddy, Obulapuram Mining Company is the registered owner of the vehicle (Annexure-15 of Chapter-9).
The contents of the files indicate that the vehicles belonging to Devi Enterprises, Madhushree Enterprises, Lakshmi Aruna Minerals and Obulapuram Mining Company Private Limited were managed jointly, further substantiating the fact that these companies were operating as a “group”.
17. Excel file OMC_loading_details_TM& VENAG” & PDF file “MITRA.SK PVT.LTD” The file shows details of chemical analysis Report done by Mitra S K Pvt. Ltd. with regard to the iron ore covered under the following headings:
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1. Iron ore fines dispatch from Venkatagiri to Karwar for proposed shipment on account of M/s OMC, Bellary through truck loading - 252 trucks, 5,006.53 MT (date of loading between 15/4/2009 and 20/4/2009)
2. Calibrated iron ore dispatch from Venkatagiri to KFIL stock yard, Bevinahalli for proposed shipment on account of M/s OMC, Bellary through truck loading - 181 trucks, 30,00.43 MT (date of loading between 10/5/2009 and 12/5/2009)
3. Iron ore fines dispatch from Nagappa Mines (Kallahalli) to Karwar for proposed shipment on account of M/s. OMC, Bellary through truck loading – 430 trucks, 10,748.70 MT. (date of loading between 19/5/2009 and 29/5/2009)
4. ROM dispatch from Venkatagiri to plot for proposed shipment on account of M/s OMC, Bellary through truck loading – 2493 trucks, 44500.16 MT. (date of loading between 30/5/2009 and 2/6/2009)
Further, the PDF file “MITRA.S.K. PVT.LTD.” contains a “Certificate of Analysis” dated 30-5-2009 and 31-5-2009 with following statements -
“1. “We hereby certify that an average sample(s) of iron ore fines, drawn by our representative
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during the process of loading into 48 trucks at Nagappa mines on 28-5-2009 on account of M/s Obulapuram Mining Company with the following result….”
2. We hereby certify that an average sample(s) of iron ore fines, drawn by our representative during the process of loading into 17 trucks at Nagappa mines on 29-5-2009 on account of M/s Obulapuram Mining Company with the following result….”
The ING Vysya bank Account Statements of Devi Enterprises and Madhushree Enterprises confirm payments to Mitra S K Pvt Ltd for the analysis.
On verifying the above records with the permits issued to both Venkatagiri i.e. TM Mine and VENAG Mine, it is found that no permits were issued to OMC for the said destinations and the said loading period mentioned in the file. Hence the entire quantity of 63,255.82 MT iron ore for which chemical analysis was done by Mitra S K Pvt Ltd was illegally extracted and sent to multiple destinations that included destinations for exports. Payments for analysis of iron ore by Devi Enterprises and Madhushree Enterprises on behalf of OMC further demonstrates that these companies were working as part of the “group”.
18. PDF files “ avery PO.pdf”, “ avery PO 1.pdf” and “PO essae.pdf”
The files contain copy of purchase orders from Devi Enterprises to Avery India Ltd. and Essae Digistronics Private
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Limited for the supply of Weigh Bridges. The locations for supply of Weigh bridges as mentioned in the file are:
“MBT Mines (Vittalapuram village) Veeyam Pvt. Ltd Mines (Karadikolla village Sandur taluk) JSW site [Later we will inform about the location]”
It is to be noted that both MBT Mine and VEEYAM Mine are part of the group of mines that were controlled and managed by the “group”.
Further, ING Vysya Bank Account of Devi Enterprises confirms 30% advance payment to Essae Digistronics for the supply of Weigh Bridges. The payments were made as per the payment terms mentioned in the Purchase orders.
The document shows that the purchases of weigh bridges for MBT Mine and VEEYAM Mine by Devi Enterprises were made to ensure full control of the “group” over mining operations in these mines.
19. Excel files “Stock Details” and “JULY’09”
Excel file “Stock Details” spreadsheets “Stock” and “Permitted Quantity” mention RK Mining as Raising Contractor for TM and TMC Mines. Further Excel file “Stock details” spreadsheet “R K Mining” contains details of payments to R K Mining at the rate of Rs250/MT against excavation charges, crushing & screening, waste handling charges and transportation of 4,18,485.82 MT in TM Mine.
Excel file “JULY’09” contains a Statement of Account of Devi Enterprises (ING Vysya Bank A/C No 2020-
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202011012661-CD) for the period July 2009. The statement of Account shows a payment of Rs 4886700 to RK Mining. The transaction is confirmed from the Devi Enterprises Statement of account in ING Vysya. Payments to the Raising Contractor of TM Mines by Devi Enterprises is a further proof that TM Mine was controlled by the “group”
18) Examination of Statements of Account of Bank Accounts of M/s Devi Enterprises (Annexure-16 of Chapter-9) and Madhushree Enterprises (Annexure-14 of Chapter-9): M/s Devi Enterprises has its bank account in M/s ING Vysya Bank with account no 202011012661. Madhushree Enterprises has its bank account in ING Vysya Bank with account no 2020 202011012670 CD. Examination of the statements of accounts reveal the following:
1. Payments were made to raising contractors like RK Mining Pvt Ltd and Vijaya Leasing Company from Devi Enterprises. This confirms that the firm was bearing costs of production for the mines.
2. Receipts of money from M/s ILC, M/s Eagle Traders and Logistics, Alpine International, Sri Srinivas Minerals (SSM), Satavahana Ispat and others. These companies/firms are mentioned in the files examined above as the parties to whom illicit iron ore extracted from the mines was supplied. Receipts of payments from these companies/firms confirm that Devi Enterprises and Madhushree Enterprises were involved in the supply of illicit material to these companies /firms from the mines.
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3. Regular payments to transport companies Sree Manjunath Transport, Sai Ram Transport, Madeena Transport, Sree Kaveri Transport, Sree Venkateshwara Transport, SS Transport, Neelkantha Transport, Karuna Transport, Gangavathi Transport and Others. This indicates involvement of these transport companies in the transport of illicit iron ore.
19) Limited Review of Financial Statements of Mehaboob Transport Company for Financial Year 2008-09 and 2009-10
(1) Mehaboob Transport Company is one of the mines controlled by the “group”. As per the seized documents Devi Enterprises is the front company controlling operations in the mine. The raising contractor in MBT is Dushyant Reddy – Vijaya Leasing Company.
(2) A limited Review of the Financial Statements of MBT for the Financial Years 2008-09 and 2009-10 was conducted through a Chartered Account (Annexure 15 of Chapter-9). The finding of the review is as below:
“Based on our review conducted and analysis of the financial statements and select transactions of the Mehaboob Transport Company as above, causes us and appears to believe that financial statements, books of accounts of the Mehaboob Transport Company have been fabricated and statements have been mis-represented, while accounting and reporting for the sales and debtors transactions. It justifies in concluding the fact that Mehaboob Transport Company is not actually
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carrying out the mining operations as stipulated in the mining lease / agreement and it has sub- contracted the operational work to M/s. Devi Enterprises who have paid all taxes, permit fee etc, and Excavation work and transportation is sub- contracted to M/s. Vijay Leasing Company. The cost of excavation is also paid by Devi Enterprises. The sales figures are under reported, and window dressing is done in sales and debtors accounts with a few sales entries whose accounts are squared off by transferring the balance to a group company. Also limited credits or on account payment have been noticed which involve cash flow for the sales, indicating majority of the sales are to Devi Enterprises who have not paid for the goods and have claimed credit for the operational expenses incurred by them. Under invoicing reflects duties and taxes have been evaded.”
The review report confirms that mining operations in MBT Mine are de facto run by Devi Enterprises and the book of accounts of the MBT have been fabricated and misrepresented to conceal this fact. The review reports other violations also.
It is suspected that books of accounts and financial statements of other mines controlled by the group might have been similarly fabricated. Therefore a comprehensive review of books of accounts of all these mines needs to be taken up.
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From the documents seized by Income Tax Department as given in Annexure 1 & 2 of Chapter-9, it is clear that the ‘group’ includes companies / firms like Anantapura Mining company (AMC), OMCPL (Obulapuram Mining Company Private Limited), Associated Mining Company, Devi Enterprises, Sree Minerals, Madhushree Enterprises, Basaveswara Minerals, SVK (S.B. Minerals) & others.
This “mining group” adopted the following modus operandi in carrying out large scale illegal mining operations by:
1. Identification of mines where the illegal operations can be carried out.
2. Formation of front companies like Devi Enterprise, Madhushree Enterprises, Sri Minerals, Basaveswara Minerals etc. with close confidantes heading them, to control and manage the identified mines on proxy.
3. Involve companies/ firms/ others i.e. Vijaya Leasing Company (DUSHYANTA REDDY), R K Mining, Ananta Sena Reddy, Yerri Babu, Srinivas Reddy etc. for carrying out excavation, crushing & screening, waste handling etc. in the identified mines.
4. Trading of Iron ore illegally through Eagle Traders, Janadevi Minerals, Sri Lakshmi Venkateshwara Minerals, Vyshnavi Minerals and many others.
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5. Involve Swastik Nagaraj, Mahesh Karapudi, and others to facilitate transport of illicit ore on risk.
6. To carry out export of illicit iron ore through ILC, SB Logistics, Sri Mallikarjun Shipping Private Limited, Mineral Embassy, TBSL, SMSK, SSM and others
7. Creation of front companies abroad like Elite Brilliant, GLA for under invoicing
8. Get to manage posting of chosen officials in all mining connected departments on key posts in mining districts.
9. Payment of bribes or threat to officials to close their eyes and follow oral whip.
Examination of the documents, among others, reveals the following:
1. To achieve the objective of sharing of iron ore, various leases which are either having boundary dispute or any other disputes were chosen to have contracts for extraction of iron ore over and above the permitted quantity. For this purpose certain “front partnership firms” like Devi Enterprises, Madhushree Enterprise etc. were formed. Some of the partners of these firms were erstwhile employees of the Brahmani Steels. A few other partnership firms like Sri Minerals and Sri Basaveshwara Minerals wherein Shri BV Srinivas Reddy as the Managing Partner were also used as “front partnership firms”. It is to be noted that Sri BV Srinivas Reddy is also one of the partners in the Obulapuram Mining Company Pvt Ltd (OMCL).
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2. Such “front partnership firms” have then taken control of many mining leases by entering into an agreement/MOU/Power of Attorney with the lessees. Though these agreements/ MOUs/ Power of Attorney were done in various garbs including that of contracts for extraction of iron ore and sale of iron ore. However a careful scrutiny revealed the following facts:
a. The contractual provisions in some of the agreements were such that the leases were virtually handed over to these “front partnership firms”, including the responsibility of renewal of the leases.
b. The agreements were done for long terms with clauses which made it effective till the lease was in operation.
c. In many cases the mining activities was divided into two parts i.e. extraction and sale of ore and the agreements were done with two different firms for each of these activities. However a careful scrutiny reveals that the Managing partner for both the firms was same person, virtually ensuring total mining operations control in the lease.
d. The calculation with regard to payments to be made by Trident Minerals to one of the “front partnership firm” i.e. Sri Minerals, for the so called extraction of ore and the payments to be made by another “front partnership firm” i.e. Basaveswara Minerals for sale of iron ore to the lessee were done in such a way that there was no money flow required between the lessee and the “front partnership firms”. The deal also meant that lessee was
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able to get 50% of the iron ore extracted by these firms free of cost. The minimum iron ore that was agreed to be extracted from these mines in a year was more than the limit set under Environmental Clearance and IBM limits. Similar agreements were made by Mehaboob Transport Company with Sri Minerals and Basaveswara Minerals respectively.
3. In another MOU a lessee e.g. JM Vrushabendraiah, agreed to give away 40% of the extracted iron ore to one of these “front partnership firm”, Madhushree Enterprises, in lieu of so called “expertise, knowledge and technical know-how” which was supposed to be provided by the firm which was three months old and had partners who had no experience of mining.
4. In other case the leases, Indian Mines and Minerals & Rajapura Mines, were being controlled by incorporating individuals from the group as fresh partners in the firm and retiring the existing partners.
5. In certain cases mining operation were carried in the absence of requisite approvals e.g. VEEYAM Mine. In some other cases mining operations were started even before approvals were obtained from Competent Authority e.g. IMM Mine, thereby carrying out illegal mining activities.
6. The data seized by the IT department indicates that a total 16 different mines (including the erstwhile old Dalmia mine) were being directly or indirectly controlled by the mining group. They are :
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(i) Mehaboob Transport Company ML No 109 & 2568 (ii) Trident Minerals ML No 2315 & Trident Mining Company Pvt Ltd ML No 1732
(iii) VENAG (Shantalakshmi Jairam ML No 2553 (iv) VEEYAM Private Limited ML No 988 (v) Erstwhile Old Dalmia Mine (by way of encroachment)
(vi) Indian Mines & Minerals ML No 2572 (vii) Lakshminarayana Mining Company ML No 2487 (viii) JM Vrushabendraiah ML No 2173 (ix) HT/HM (Hind Traders ML No 2548) (x) SVK NEB Range A & B Block (SB Minerals ML No 2550)
(xi) SVK NEB Range Vyasankere (SB Minerals ML No 2515)
(xii) Rajapura Mine ML No 2190 (xiii) KM Parvathamma ML No 2514 (xiv) M Mansoor Ahmad ML No 2616 (xv) N Ratnaiah and (xvi) Deccan Mining Syndicate ML No 2525
7. A total quantity of 73,99,314 MT of iron ore mostly illicitly was extracted and/or transported during 2009 and 2010 from 11 different mines. The cost of the illicit iron ore is approximately Rs 1849,82,85,000/- @ Rs 2500 / MT.
8. Monitory transactions in a few cases of production/dispatches have been tracked and verified from bank accounts and found correct.
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9. The records reveal that the money for these transactions used to be received more in cash and less through bank transactions. Transactions as per these records used to happen in 75:25 or 50:50 ratio of Cash and Bank transaction respectively. In a few cases the entire transaction was in cash.
10. A huge amount of iron ore was extracted /dispatched from a mine called SVK NEB Range B Block, Jaisinghpur (S.B. Minerals ML No.2550), mostly from the adjoining forest area in old Dalmia mines. The production from the said mine has been categorized into two parts i.e. production “Dalmia” and production “SBM” indicating that production under the column Dalmia is from the adjoining mine (which was earlier called Dalmia mines). The transferee of Dalmia Cements has made complaints to Mines and Forest departments for illegal removal of iron ore from their mine. But it seems no action has been taken in this regard. The CEC also in its recent report has stated about the large scale illicit mining which had taken place in the erstwhile Dalmia mine. SB Minerals played a role in the illegal extraction of ore from the erstwhile Dalmia Mines. It is further observed from the electronic data that the entire illicit iron ore extracted from “Dalmia” mine has been shown against the LAM (Laxmi Aruna Mineral) A/C. The transportation of this iron ore has been shown to be done by Swastik and Jambunath.
11. Another seized file of A/Madhu/1 reveals that huge amount of iron ore was extracted /dispatched from a
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mine called VM (indicating Veeyam Mines) and DM Mine (indicating Dalmia Mines).
12. The S.B. Minerals (Vyasankere and NEB) played a major role in illegal mining.
With the above facts and circumstances, the following conclusions are drawn for further needful action:
1. A mining ‘group’ that included companies/firms like OMCPL (Obulapuram Mining Company Private Limited), Anantapura Mining company (AMC), Associated Mining Company, Devi Enterprises, Madhushree Enterprises, Sree Minerals, Basaveswara Minerals, SVK (S.B.Minerals) & Others took over control of mining operation in several mines using various means in violation of MMRD Act and MC Rules.
2. Seized Records obtained from the Income Tax reveal that a total of 15 different mines were under direct or indirect control of the mining ‘group’. These mines are : (i) Mehaboob Transport Company ML No 109 & 2568 (ii) Trident Minerals ML No 2315 & Trident Mining Company Pvt Ltd ML No 1732;
(iii) VENAG (Shantalakshmi Jairam ML No 2553 (iv) VEEYAM Private Limited ML No 988 (v) Indian Mines & Minerals ML No 2572 (vi) Lakshminarayana Mining Company ML No 2487
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(vii) JM Vrushabendraiah ML No 2173 (viii) HT/HM (Hind Traders ML No 2548) (ix) SVK NEB Range A & B Block (SB Minerals ML No 2550) (x) SVK NEB Range Vyasankere (SB Minerals ML No 2515) (xi) Rajapura Mine ML No 2190 (xii) KM Parvathamma ML No 2514 (xiii) M Mansoor Ahmad ML No 2616 (xiv) N Ratnaiah and (xv) Deccan Mining Syndicate ML No 2525
The grant of leases of these mines should be cancelled after following due process of law. Till the process of cancellation is completed, the mining activities should be stopped.
3. From the seized documents, it is revealed that approximately 16.85 Lakh MT of iron ore has been removed from the lease area of erstwhile Old Dalmia mines in April 2009 to June 2010. The location of the area from where the ore was extracted is by the side of SB Minerals ML No 2550 (SVK NEB). It is the alleged encroached area in the Old Dalmia Mines. Further it is pertinent to note that there is a leading role of SB Minerals ML No 2550 (SVK NEB) and SB Minerals ML No 2515 (SVK Vyasanakere) in illegal mining during the said period.
4. Production and dispatch details contained in the seized files in respect of 11 mines, reveal that a total quantity of 73,99,314 MT of iron ore was
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illicitly extracted and/or transported during 2009 and 2010. The cost of the illicit iron ore is approximately Rs 1849,82,85,000/- @ Rs 2500/MT. This loss should be recovered with exemplary penalties from all companies/firms/ persons of the mining ‘group’ mentioned and others who are responsible.
5. The findings of this chapter of large scale illegal mining have a direct co-relation with highest illegal export during the 2009-10 and 2010-11.
6. Due to multiple ways of illegal mining there is huge loss to the state government. It is a fit case to initiate action under the relevant provisions of Law and to cancel the lease grant of all the leases as stated in Para 2 above.
7. During this corresponding period, large amount of bribes was paid to officials as reflected in the chapter on Collapse of Administrative and Governance System.
The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. 8. Action should also be taken against all those Directors/partners/proprietors of Companies/firms/ individuals and others, who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State
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Government and penal actions should also be resorted to, wherever necessary.
9. After going through the content of the Chapter, I am of the opinion that illegal mining has been taken place beyond the boundaries of the leases and also unauthorized removal of ore from the leases itself. In this process, large quantity of iron ore has been illicitly extracted and dispatched. Action should be initiated against the officials of Mines and Forest Departments, who have allowed this illegal mining during the periods 2009 and 2010-11.
10. The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
11. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA.
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10
ILLEGAL IRON ORE TRADE BY EAGLE TRADERS AND LOGISTICS
1) Dr. U.V. Singh has given me an elaborate report in regard to the illegalities committed by certain persons and a particular firm. From the said report, it is seen that the documents seized by Income Tax Department in the cases of Sh Ali Khan, Sh Karapudi Mahesh and his associate Sh Dada Peer and by Lokayukta Police from Belekeri Port, have revealed a major role played by M/s Eagle Traders and Logistics (ET&L), in trade and transport of illicit iron ore during 2009 and 2010. Among others it is found that:
(1) There were large commitments and dispatches of illicit iron ore to ET&L from several mining leases that were directly or indirectly controlled by the mining ‘group’ as discussed in the Chapter “Illicit Extraction, Transport, Export & Domestic Consumption of Iron Ore in 2009-10 and 2010-11 at 40:60 or 50:50 sharing of Production and Dispatches”.
(2) Transportation of large quantity of illicit iron ore of M/s ET&L has been facilitated by Swastik Nagaraj, Karapudi Mahesh and their Associates in 2009 and 2010.
(3) ET&L has made large “risk amount” payments to Swastik Nagaraj, Karapudi Mahesh and Others.
(4) ET&L was involved in supply of illicit iron ore to Belekeri port during 2009-10. Forged permits seized from Belekeri port by Lokayukta Police in Feb 2010 mention, among others, the name of Eagle as one of the suppliers.
(5) The Director of Income Tax in his letter dated 10-02- 2011 (Annexure 1 of Chapter 10 of Dr.U.V. Singh’s Report)
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has stated that Income Tax Department is in the process of investigation, the case of M/s. Eagle Traders and Logistics, Bellary. He has stated that the concern is a partnership firm in which Sri B. Nagendra and Sri K. Nagaraj are appearing as partners having 75:25 shares respectively. Sri B Nagendra is a sitting MLA of Karnataka State. Sri K. Nagaraj is suspected to be a mere name lender and dummy. He further stated that above named firm has, during financial years 2007-08, 08-09 and 09- 10 shown turnover of approximate Rs. 350,00,00,000=00 on account of trading in iron ore. The preliminary investigation indicates that the iron ore traded in was not legally sourced.
(6) The Income Tax Department has conducted search and seizure operation in case of B Nagendra, who is the partner in M/s Eagle Traders and Logistics.
(7) Moreover, bank accounts of M/s ET&L reveal mammoth financial transactions between M/s ET&L and other companies/firms found involved in trade in illicit iron ore.
It is in this background, the role played by M/s ET&L in trade in illicit iron ore has been taken up in this chapter.
2) Bank Details and Financial Transactions (1) Sri B. Nagendra S/o Sri B. Anjaneyulu, D No. 126/18, 1st Cross, Nehru Colony, Bellary has filed an application for registration of a unregistered partnership firm by trading name Eagle Traders and Logistics (ET&L) under the Karnataka Value Added Tax Act 2003, Central Sale Tax Act 1956/Karnataka Tax on Entry of Goods Act 1979 on 20-08- 2007. The registration includes the following details among others: a) Date of Commencement of Business-03-08-2007.
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b) Turnover estimated for 12 months – 10.00 lakhs. c) Bank details – Nil d) Partners – 1)B. Nagendra S/o Sri. B. Anjaneyulu 2) K. Nagaraj S/o Sri K. Mallaiah e) Type of Business – Wholesaler f) PAN No. – ADKPN9671M (2) M/s ET&L has an account with Axis bank, Parvathinagar, Bellary with Account no. 267010200007740. The bank account details of Eagle Traders and Logistics has been obtained from the Axis Bank, Bellary and detailed analysis of this account with respect to amounts credited and debited has been made for various individuals, firms and others.
(3) In the said Account (267010200007740) there is a credit of Rs 649,73,39,232.00 and debit of Rs. 649,73,36,892.00 for a period since September 2007 to Feb 2011 of M/s ET&L. (Annexure 2 of Chapter 10 of Dr.U.V.Singh’s Report)
(4) It is to state here that there are four other bank accounts in the name of Eagle Traders and Logistics and Sri B. Nagendra. The details of the 4 accounts are given as under: (It is learnt that there is an account at Vidhan Soudha Branch)
Bank accounts of Sri B. Nagendra & ET & L Name Name of the Bank Account No. M/s Eagle Traders Axis Bank, Bellary 267010200007740 and Logistics M/s Eagle Traders HDFC Bank, 17602320000339 and Logistics Hospet B. Nagendra Axis Bank, Bellary 26701010005906 B. Nagendra Indusland Bank, 0008-AC2481-060 M.G.Road
(5) Further in the said account (267010200007740), it is found that there is monotonously uniform withdrawal through cheques on a single date against individual persons.
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Such persons may be either Fake or benami names or unregistered dealers of iron ore. In most of the cases a large sum of amount is credited through cheques or cash in this account and then withdrawn in denominations of 9,00,000=00 or so. This is being repeated throughout the period for which the statement of account was analysed. The same style of withdrawal is also adopted in case of some other firms to whom the money is credited from this account. This might be a way of making payments to various parties involved in illicit iron ore trade and for himself without giving scope for recorded trail. Dr. Singh’s report contains of a list of persons who are found to be involved in the above mentioned transactions, which is found at Table – 2 of Chapter 10 of Dr.U.V.Singh’s Report.
(6) Further, Dr. Singh’s report also contains a list of traders which were used by M/s ET&L as name lenders and for creating layers at Table – 3 of Chapter 10 of Dr.U.V.Singh’s Report with their bank account details containing information regarding the period, total amounts credited and debited from their accounts and the balance. He has commented that the list at Table – 3 is not final and complete. Some accounts details are yet to be obtained from respective banks. From the above table, one can understand the money transfers running into hundreds of crores of rupees, to other name lenders and layers throughout the period 2008 to 2011. It is necessary to have a detailed investigation into these monetary transactions by the competent authority.
(7) In Table – 4 of Chapter 10 of Dr.U.V.Singh’s Report, it is seen that M/s ET & L has received large sums of money from several companies/firms. Almost of all these firms/companies/others listed are involved in iron ore
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trading/export etc. Therefore, it is inferred that they are recipients of illicit material from M/s ET&L and/or are used for routing of money to other accounts or cash withdrawals whichever is available.
(8) In Table – 5 of Chapter 10 of Dr.U.V.Singh’s Report, the names of firms/companies/others who had linkage with M/s ET & L in illegal iron ore trade are detailed. (9) From the said tables, it may be noted that companies like SB Logistics, Dream Logistics Pvt Ltd, Shri Mallikarjun Shipping Pvt Ltd, Rajmahal Silks, Arihant Tiles and Marbles, Hill Rock Minerals, Kothari Products and others are major exporters of iron ore and they had iron ore trade with the M/s. ET&L. In fact M/s ET&L was one of the major supplier of iron ore to these companies/firms.
(10) Bank Account of M/s ET&L clearly indicates large remittances from certain exporters like SB Logistics, Dream Logistics etc. Analysis of few of them have been made by Dr. Singh which indicates that M/s. SB Logistics IEC No 0709001550 has exported 13,37,744 MT of iron ore during 2009 and 2010. All exports by SB Logistics took place from Belekeri and Krishnapatnam. Details of Iron ore exports by M/s. SB Logistics are given in Table -6 of Chapter 10 of Dr.U.V.Singh’s Report. It is seen from the said table that the total exports by SB Logistics is 13,37,744 MT. As against this, the total permits issued, during 2009 and 2010, for transporting iron ore to Krishnapatnam and Belekeri with SB Logistics as Party was only 71,000 MT.
(11) M/s SB Logistics has bank account no. 30799888242 in State Bank of India, Hospet. There may be more bank accounts too. An examination of statement of
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account of this bank shows, that between Aug 2009 – Aug 2010 ( i.e. the period of exports by SB Logistics), a total of around Rs 100 Cr were transferred from this account to M/s ET&L. Hence, it is inferred that a substantial part of exports of SB Logistics consisted of illicit material procured from M/s ET&L.
(12) Dream Logistics Ltd has bank Account no 30261674683 in State Bank of India. An examination of statement of money of this bank account shows, that between June 2009 and May 2010, a total of about Rs 30 Cr was transferred from this account to M/s ET&L. As per the Customs data between June 2009 and May 2010, M/s Dream Logistics Ltd exported 13,76,848 MT of iron ore, however the permits that were issued to ports with M/s Dream Logistics as party were for only 2,23,808 MT. Hence in this case too, it is presumed that part of exports by M/s Dream Logistics comprised of illicit iron ore mainly sourced from M/s ET&L.
(13) After examining the documents seized by Income Tax Department during search in the case of Sri Ali Khan, Dr. Singh’s report says that large scale illegal extraction of iron ore to meet the demand and dispatches to M/s ET & L and other parties from Sri Ali Khan and others are indicated. Particulars of which have been shown in Table – 7 of Chapter 10 of Dr.U.V.Singh’s Report. According to Dr. Singh, as per the DMG records, hardly any permits were issued in favour of M/s ET & L as party during the said period.
(14) Report further examines a spreadsheet named “COMMITMENTS & MOVEMENTS” which contains, among others, details of quantities committed to M/s ET&L from Mining Leases, quantity dispatches and details of payment by
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M/s ET&L. The said particulars are reflected in Table – 8 of Chapter 10 of Dr.U.V.Singh’s Report.
(15) Table – 9 of Chapter 10 of Dr.U.V.Singh’s Report shows mining lease wise COMMITEMENT, RATE, AMOUNT RECEIVED, BALANCE, REMARKS, DISPATCHED QUANTITY. The said sheet is reflected in Table – 9 of the report.
The mines named in the spreadsheet are indicated below: a. The mine A Block is “SVK NEB Range Block A Jaisingpur 44.52 Hectares – 111 Acres” as per the spreadsheet “STOCK”. This indicates SB Minerals ML No 2550. b. The mine TM is “TM 13.50 Acres & 80.56 Acres Venkatagiri” as per the spreadsheet “STOCK”. This indicates Trident Minerals ML No 2315. c. The mine VENAG is “VENAG 125 Acres” as per the spreadsheet “STOCK”. This indicates Shantalakshmi Jairam ML No 2553. d. The mine VYASANAKERE is referred to as “SVK VYASANKERE” in file “S.V.K.V DEC-09.xls” in the same folder. This indicates SB Minerals ML No 2515.
(16) According to the report of Dr. Singh, on verification with permits, it is found that the quantities mentioned along with periods, type/grades of ore, party names and destinations did not match with permits issued by Deputy Director, Mines & Geology, Hospet. This indicates that this entire quantity of iron ore mentioned here is illicit.
(17) Further, the sheet containing dates with amount paid shows that these amounts are referred to the amount received for the material dispatched from A Block, TM and Venag. This abstract is shown in Table – 10 of Chapter 10 of Dr.U.V.Singh’s Report.
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(18) From the above extract, it is seen that M/s Eagle Traders and Logistics has bank account no 267010100007740 in Axis Bank, Bellary. Some of the payment made by M/s ET&L and shown as received in file “COMMITMENTS & MOVEMENTS” have been verified from the statement of this account. A few of the examples are given below:
(19) Under heading “received details” in Table-10 of Chapter 10 of Dr.U.V.Singh’s Report, Rs 2,00,00,000/- are shown as received on 05/06/2009. Against this, the 05-06-2009 entry in statement of M/s ET&L’s bank account shows transfers of Rs.1,00,00,000 each to SRI SUNANDA ENTERPRISES and SRI SHIVA PRIYA TRADERS.
(20) SRI SHIVA PRIYA TRADERS has a bank account no 267010200009355 in Axis Bank. Scrutiny of the statement of amount of this account confirms receipt of Rs 1,00,00,000 from Eagle Traders on 05/06/2009. Further, the statement of account shows that on 09/06/2009 this entire amount was withdrawn through 12 cheques drawn in favour SELF. The denomination of 10 cheques was Rs 9,00,000 each and 2 cheques were of Rs 6,00,000 and Rs 4,00,000 denominations respectively.
(21) Similarly M/s ET&L account shows, transfers of Rs 1,00,00,000 to SRI SUNANDA ENTERPRISES and of Rs 75,00,000 to SRI BANASANKARI TRADERS on 17-06-2009.
(22) Similarly, the statement of account of M/s ET&L’s bank account shows transfers of Rs. 1,00,00,000 each to SRI KANAKADDURGA ENTERPRISES and SRI KAMAKSHI MINERALS and transfer of Rs 50,00,000 to SRI SOMESWARA
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TRADERS, etc. on 19-06-2009. SRI SOMESWARA TRADERS has a bank account no 267010200014650 in Axis Bank. Scrutiny of the statement of account of this account confirms receipt of Rs 50,00,000 from Eagle Traders on 19/06/2009. Further, the statement of account shows that on 14/07/2009 this entire amount was withdrawn through 5 cheques drawn on SELF for Rs 10,00,000 each.
(23) The files correspond to payments for a limited period only and there may be many more such transactions. Tracks of money trail show that payments from M/s ET&L to Ali Khan and others were made through circuitous routes and apparently final payments were made in cash after withdrawal of cash though self drawn cheques. It may be noted that Sh Ali Khan & Others are part of the mining “group” that controlled the mines mentioned in Table 10 and whose activities are discussed in the Chapter “ILLICIT EXTRACTION, TRANSPORT, EXPORT & DOMESTIC CONSUMPTION OF IRON ORE IN 2009-10 AND 2010-11 AT 40:60 OR 50:50 SHARING OF PRODUCTION AND DISPATCHES”
(24) Some other documents show details of dispatch of iron ore from various mines to M/s ET&L. This has also been discussed in detail in the chapter “Illicit Extraction, Transport, Export & Domestic Consumption of Iron Ore in 2009-10 and 2010-11 at 40:60 or 50:50 sharing of Production and Dispatches”. The sections related to M/s ET&L are reproduced in Chapter-10 of Dr. Singh’s Report.
(25) The documents discussed in the report of Dr. Singh clearly show that M/s ET&L was receiving illicit iron ore from various mines e.g. VEEYAM ML No 988, VENAG
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(Shanthalakshmi Jairam ML No 2553), Trident Minerals ML No 2315 etc. Further M/s ET&L was also supplying illicit iron ore to traders and exporters like SB Logistics, TB Logistics, SMSK and others. This trade in illicit iron ore is substantiated by statements of bank accounts of M/s ET&L and others.
(26) Examination of the documents seized by the Income Tax Department in the case of Sh K.V. Nagaraj, Karapudi Mahesh and his associate Dada Peer and others show that M/s ET&L was regularly receiving iron ore extracted and transported illicitly by KV (Swatik) Nagaraj, Karapudi Mahesh and their associates. This has been discussed in the chapter “ILLEGAL IRON ORE MINING ACTIVITIES BY KV (SWASTIK) NAGARAJ AND KARAPUDI MAHESH AND THEIR ASSOCIATES”. The relevant extracts are reproduced in Chapter 10 of Dr.U.V.Singh’s Report.
(27) The documents show that M/s ET&L was regular recipient of illicit iron ore in an organized racket of transportation of illicit iron ore. The documents also show M/s ETL supplied illicit iron ore to traders and exporters like Dream Logistics Company, Lakshmi Aruna Minerals, SB Logistics, Devi Enterprises and others.
(28) Regarding “Risk amount” payments to Swastik Nagaraj, Karapudi Mahesh and Others, documents show that M/s ET&L was regularly paying ‘risk’ amounts to KV (Swastik) Nagaraj, Karapudi Mahesh and their associates. This risk amount was paid for illegal removal, transportation of iron ore to defined destinations. This is dealt in detail in the chapter “ADMINISTRATIVE AND GOVERNANCE SYSTEM COLLAPSE”.
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(29) Records seized from the premises of Karapudi Mahesh have been compiled with respect to risk paid by ET&L for the period of 21-11-2009 to 19-04-2010. The risk amount for the said period comes to Rs. 3,99,00,000=00. The records further show that the ET&L has paid an amount of Rs. 1,34,68,300=00 to Karapudi Mahesh as “Bellary risk” for the period 11-01-10 to 10-02-10. The relevant portion of data is reproduced at Table – 11 of Chapter 10 of Dr.U.V.Singh’s Report.
(30) The available records pertain to a limited period only. However records show that M/s ET&L was involved in regular transport of illicit iron ore during 2009 and 2010, therefore the risk amount paid for by M/s ET&L would be much larger than is indicated by the records available for this limited period.
(31) During the period Oct 2009 to May 2010, M/s ET&L had supplied illicit iron ore to Belekeri port, which has been discussed in detail in the Chapter “EXPORT OF ILLICIT IRON ORE FROM BELEKERI PORT”. The relevant part of that discussion is reproduced in Chapter 10 of Dr.U.V.Singh’s Report.
(32) Here, it is noted that among others, forged/fake permits were seized from Belekeri port by Lokayukta Police in Feb 2010. (This is discussed in detail in Chapter “EXPORT OF ILLICIT IRON ORE FROM BELEKERI PORT”). The forged permits contain the name of M/s Eagal (Eagle) as one of the suppliers. This clearly indicates that M/s ET&L was one of the parties involved in illicit transportation of iron ore to Belekeri port. It is pertinent to note that permits for “M/s ET&L” were issued
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during March 2010 whereas iron ore was supplied much earlier to that. This may be an attempt at “cover up” in response to the Lokayukta raid in Belekeri port on 20/02/2010 and subsequent actions.
(33) Under Sec 131, the Income Tax Department had recorded statement on oath of Sri B. Nagendra, the partner in M/s ET&L in the case of B Nagendra u/s 132 of the IT Act 1961.
(34) During the recording of the statement, Sri Nagendra was asked that as per the Books of Accounts, the URD (Unregistered Dealers) purchases by M/s Eagle Traders and Logistics, for the financial year 2007-08, 2008-09 2009-10 and 2010-11 are Rs. 77,02,800/-, Rs. 13,4983,622/- and Rs. 45,53,51,501/-, NIL respectively and so far M/s Eagle Traders and Logistics has a. Not produced the persons/ concerns from whom it has purchased,
b. Not proved the real source of purchase, and
c. Not produced any transport permits to prove the legality of the source etc.
(35) In reply to this question, Sri B. Nagendra has, among other things, stated the following that:
a. cash payment have been made for the purchase of material from URDs.
b. purchases of iron ore are made from small and marginal farmers who dig iron ore float in their agricultural fields in small quantities and sell them to the traders. The purchases of iron ore from these farmers is out of business expediency and compulsion.
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c. the farmers who sell iron ore do not give details of their full identity, details of survey number, address, location of field etc
d. there is no question of permits for URD purchases.
e. for the aforementioned reasons the people cannot be produced.
On examination of the reply it is clear that M/s Eagle Traders and Logistics have admitted that there are no permits for the alleged URD purchases. Further it is unable to produce the people from whom they have purchased the material.
(36) Documents examined earlier in the chapter clearly reveal that M/s ET&L was involved in trade of illicit iron ore extracted from various mines, forest areas, Government Lands, patta lands and others. Hence the claim of procurement of iron ore from URD has been made to cover up its illegal activities.
(37) Further M/s ET&L has also sourced its illicit material from various leases like SB Minerals, Trident Minerals, Shantalakshmi Jairam and others. Transportation of most of this illicit material was facilitated by Swastik Nagaraj, Karapudi Mahesh and Others. Furthermore M/s ET&L provided this illicit iron ore for exports to various exporters like SB Logistics, Dream Logistics, Shri Mallikarjun Shipping Company, TB Logistics and others. It is recommended that further investigations should be carried out into the monetary transactions between M/s ET&L and all the companies listed in Table 3, 4 & 5 of Chapter 10 of Dr.U.V.Singh’s Report.
(38) Further it is revealed that M/s ETL has used many name lenders / layers to cover up its trade in illicit iron ore. An extract of the Statement on oath made by Shri B Nagendra,
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Partner in M/s ET&L, recorded u/s 131 before Asst. Director Income Tax (Inv) on 25/03/2011 is reproduced in Chapter 10 of Dr.U.V.Singh’s Report.
(39) An examination of affidavit extract reproduced above clearly shows that M/s ET&L had used these traders to create false documents with regard to source of material. Further, M/s ET&L was taking invoices/ sale bills from certain firms/individuals without actual trade of iron ore. In the reply to the observations made by Income Tax Department, Sh B Nagendra has claimed that M/s ET&L was not purchasing iron ore from the leases but from the URD and others. The entire trade has been conducted in this manner. However it is clear from the documents discussed earlier in the chapter, that most of the iron ore traded by M/s ET&L was illicit. Further, as per the statement of various URD submitted before the IT Department approximately 10,36,352.775 MTs in the year 2009-10 and 1,92,339.78 MTs in the year 2008-09 have been illegally procured and sold by M/s ET&L. This is not a final figure. There are other additional illegal iron ore transactions shown in this chapter that should also be taken as a part of illegalities by the firm. Since such iron ore quantities are illegal, it should be recovered at market value prevailing during that time from the M/s ET&L owned by Sri B. Nagendra.
(40) Besides M/s Eagle Traders and Logistics has purchased the iron ore in the year 2008-09 and 2009-10 from other traders. None of the traders is a lessee and there are hardly any permits issued to them. The affidavits of these traders before Income Tax Department proves that they were used for name lending and layering. The Table – 12 of Chapter
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10 of Dr.U.V.Singh’s Report clearly shows the names of such traders who were used for layering.
(41) As per the records of the Income Tax Department, there are about 14 transporters used by M/s ET&L in the year of 2008-09 and 2009-10. This is not a final list. There may be more transporters. The list of transporters used by M/s ET&L is given in Table 13 of Chapter 10 of Dr.U.V.Singh’s Report.
(42) From the figure as obtained from IT Department there is manifolds increase in illegalities committed by M/s ET&L during 2009-10 as compared with 2008-09. This coincides with the findings that illegal mining activities in the state peaked during the period 2009-10 and 2010-11.
3. From the facts and figures recorded in the report Dr. Singh, has come to the following conclusions.
(1) The statement of bank account of M/s ET&L (Acc No 267010200007740 Axis Bank) shows a total credit of Rs 649,73,39,232 and debit of Rs 649,73,36,892 between Sep 2007 and Feb 2011. The bank account shows large number of suspicious cash withdrawals in denominations of Rs 9,00,000 in the name of persons who are suspected to be benami or fake names. This may be noted by competent authorities for investigation and further action under appropriate laws.
(2) There is linkage of money transactions of 36 companies/firms/others, with M/s ET&L, whose accounts are given in Table 3 of Chapter 10 of Dr.U.V.Singh’s Report. Further investigation should be done in this regard to find the irregularities.
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(3) Income Tax Department has pointed out that the URD (Unregistered Dealers) purchases of iron ore by M/s Eagle Traders and Logistics, for the financial year 2007-08, 2008-09, 2009-10 and 2010-11 are Rs. 77,02,800/-, Rs. 13,4983,622/- and Rs. 45,53,51,501/-, NIL respectively for which M/s ET&L did not produce persons/ concerns from whom it has purchased, did not prove the real source of purchase, and did not produce any transport permits to prove the legality of the source etc. Further, as per the statement of various URDs submitted before the IT Department approximately 10,36,352.775 MT of iron ore in the year of 2009-10 and 1,92,339.78 MT of iron ore in the year of 2008-09 have been illegally procured and sold by M/s ET&L (Table 11 of Chapter 10 of Dr.U.V.Singh’s Report). Further it has pointed out that M/s ET&L has used name lenders and layering to create false documents to conceal sources of iron ore and hide trade in illicit iron ore (Table 12 of Chapter 10 of Dr.U.V.Singh’s Report). Competent authorities may take note of it for further investigation and taking action as per relevant provisions of law. The Commercial Taxes Department (VAT) should take note of the money transactions for evasion of tax and other penal actions.
(4) In addition to URD as pointed out by the IT Department, prima facie 3,58,482 MT of illicit iron ore was supplied to M/s ET&L from MBT (Mehaboob Transport Company ML No 2568), TM (Trident Minerals ML No 2315), VENAG (Shantalakshmi Jairam ML No 2553), SVK NEB Range Block A (SB Minerals ML No 2550) and others during the April – Nov 2009.
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(5) Transportation of large quantity of illicit iron ore for M/s ET&L was facilitated by KV (Swastik Nagaraj), Karapudi Mahesh and their associates. Risk Payments have been made to KV (Swastik) Nagaraj, Karapudi Mahesh by M/s ET&L to the tune of Rs 3,99,00,000 between 21/11/2009 and 19/04/2010.
(6) M/s ET& L was also involved in the supply of illicit iron ore to Belekeri port during 2009-10. The name of Eagle is mentioned in forged permits seized from Belekeri port. It has also obtained MDPs from Associated Mining Company in March 2010 to cover up supply to illicit iron ore earlier.
(7) There are 55 companies (Table 4 of Chapter 10 of Dr.U.V.Singh’s Report) from where M/s ET&L has received large sums of money in its account no 7740. Further investigation is required to find out the role of these companies in illicit iron ore trade and recovery thereon.
(8) M/s ET&L is a major trader in the business of illicit iron ore It has actively colluded with the “mining group” in procuring illicit iron ore from various mines controlled by the ‘group’ and others places and supplying the illicit material to various exporters like SB Logistics, Dream Logistics Ltd and others.
4. The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
5. Action should also be taken against Sri B. Nagendra, who is presently Member of Legislative Assembly and all those who are involved in the illegal mining under the relevant provisions
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of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
6. The State Government may request the Competent Authority in Govt. of India/ Reserve Bank of India to take action under the relevant Law for cash flow in various Bank Accounts.
7. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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11
THEFT OF IRON ORE FROM THE LEASE NO. 2572 OF N. SHAIKH SAB (SIDDHAPURA IRON ORE MINE)
A Mining lease ML No. 2572 in favour of N.Shaikh Sab (Siddapura Iron Ore Mine) has been granted under the Mines and Minerals (Regulation & Development) Act 1957 to an extent of 15 hectares on 05-01-2008 for 20 years. The lessee has taken approval under the Forest (Conservation) Act 1980 for the extent of 15 hectares. The area comes in the NEB range of Sandur Taluk. The area is having low grade iron ore deposits, mixed with BHQ. The area has been operated in highly unscientific manner. Under the Rule 13 (1) of MCDR 1988, the operations are supposed to be carried out manually, but during the inspection it is observed that the entire lease area was mechanically operated. This being the violation, mining activities have been suspended by the Regional Controller of Mines, Indian Bureau of Mines, Bangalore and presently under suspension (Annexure to Chapter-11 at pages10 & 11 of Dr. U.V.Singh’s Report).
2) During the investigation regarding issue of bulk permits for mining lease no 2572 of N. Shaikh Sab the following facts have come to the light.
1. Sri. Basavaraj A.E of the office of Deputy Director, Mines, Hospet has submitted a stock report on 20-04-2010 to the Deputy Director, Mines and Geology, Hospet (Annexure to Chapter-11 at page 1 of Dr. U.V.Singh’s Report). There is no inward number on the report. The report dated: 20-04-2010 has directly been placed before the Deputy Director, contrary to the official procedure.
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2. As per the stock report of Sri Basavaraj, he submits that a stock of 25000 MT of Iron ore lumps and 50000 MT of Iron ore (IO) fines are available at the mining lease area on 18-04-2010.
3. The Deputy Director issued the Bulk permits against the stock certificate as under.
a. Permit no. 305/22.04.2010 for 7392 MT IO lumps. (Annexure to Chapter 11 at page 2 of Dr. U.V.Singh’s Report)
b. Permit no. 287/21.04.2010 for 24992 MT IO fines. (Annexure to Chapter 11 at page 3 of Dr. U.V.Singh’s Report)
c. Permit no. 286/21.04.2010 for 10000 MT IO files. (Annexure to Chapter 11 at page 4 of Dr. U.V.Singh’s Report)
d. Trip sheets for 21504 MT have been surrendered in back date on 21-05-2010. It is evident from the letter and trip sheet as received in the office of Deputy Director, Mines, Hospet on 21-06-2010. (Annexure to Chapter 11 at page 5 of Dr. U.V.Singh’s Report) This indicates that the letter of surrender is structured for back date.
4. Out of the permit issued, the quantity of iron ore dispatched against the permits are as under: a. Permit no. 305- 7392 MT IO lumps
b. Permit no. 287- 3488 MT IO fines
c. Permit no. 286- 10000 MT IO fines
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5. Against the above permits there are unused trip sheets for the quantity of 21504 MT (permits are claimed to be surrendered).
6. Stock, dispatch and balance at mining lease area is shown in the table given below: Sl.No Stock of iron Permit Dispatch Stock to be ore as per AE issued MT available at report MT for MT mines MT 1 25000 Lumps 7392 7392 17608 2 50000 Fines 34992 13488 36512 Total 75,000.00 42384 20880 54120
7. In the above table it is observed that there should have been a total stock of 54120 MT (17608 lumps; 36512 fines) available at mining head.
8. During the inspection along with the Sri Deepak Sharma, APCCF, Director, Mines; Deputy Director, Mines, Hospet, Sri. Basavaraj A.E and staff of the Forest Department and Mines Department and others it is found that there is no stock whatsoever available at the leased area. On enquiry nobody was in position to explain the matter at the spot.
9. The bulk permits are issued in favour of M/s. Sree Minerals owned by Sri B.V. Srinivas Reddy who is a partner in the OMC, Bellary. (Annexure to Chapter 11 at pages 6 to 9 of Dr. U.V.Singh’s Report).
10. The Forester Sri Sanjeev Kumar on special duty has issued forest permits (form No. 27) mechanically by simply entering 16 MT in each permit. In fact, issue of Form no. 27 has lost its relevance. (Annexure to Chapter 11 at Pages 12 to 14 of Dr. U.V.Singh’s Report)
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3. With the above facts and circumstances it is concluded that:
1) The Deputy Director, Mines, Hospet, Deputy Conservator of Forests, Bellary have issued the permit in violation of Rule 13 (1) of MCDR 1988 for the quantity of 20880 MT.
2) There is a theft of 54120 MT of iron ore (fines and lumps).
3) There is a direct loss of Rs. 13,53,00,000 to the State Government with this theft (amount calculated at the rate of market value of Rs. 2500 per MT).
4) The Mines and Forest Department have issued the permits without observing the violation under the MCDR 1980 and for this lapse action should initiated against the Deputy Director, Mines and Deputy Conservator of Forests, Bellary.
5) There is no good quality of ore deposition in the leased area and lease had been granted without having any prospecting operations under prospecting license. Due to this, 15 hectares of highly developed forest area has been destroyed. In fact it is not worth to have a open cast mine in this area.
6) The loss to tune of Rs. 13,53,00,000-00 (the cost of the iron ore) with a penalty of five times should be recovered from the lessee and action should be initiated against the officials of Mines and Forest
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Department who are directly or indirectly responsible for allowing theft of such a large quantity of iron ore. The lease should be determined by the following due course of Law and the area shall be rehabilitated. 7) The action should also be taken against Sri Basavaraj A.E who has given stock certificate without proper quantification of the ore.
8) Similar action should be initiated against the ACF/RFO who have verified the stock for issue of Form No.27
9) Action should be initiated against the Forester who has mechanically issued the form no. 27 by entering 16 MT in each permit.
4. The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
5. Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
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6. The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
7. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA.
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12
ILLICIT EXTRACTION TRADE AND TRANSPORTATION OF IRON ORE BY SRI K.V. NAGARAJ (SWASTIK NAGARAJ), KARAPUDI MAHESH AND THEIR ASSOCITES
Department of Income Tax conducted search proceedings under section 132 of the Income Tax Act 1961 in connection with Sri K.V.Nagaraj (Swastik Nagaraj), Karapudi Mahesh and his associate Dada Peer on 25.10.2010 and seized various documents and computer files. The copies of these documents are also available with the Income Tax department. On a request made by the Lokayukta Institution, these documents and files were made available to the Lokayukta by the Income Tax department on 23.3.2011. The material sources of raid by the Income Tax department reveals wide spread network of places and parties that carried out illicit trade in iron ore that included transportation and stocking of illicit material, export of illicit material, and payments of “risk” amounts and involvement of multiple persons/firms/companies and others including domestic consumers of iron ore.
2. An examination of the file No.A/DP/08 (Annexure-1 to Chapter-12 of Dr.U.V. Singh’s Report), which contains the Daily Loading Reports of iron ore transportation through trucks pertaining to the period May-June 2010. The details of the same have been extracted in Chapter-12 of the report submitted by the investigating team headed by Dr.U.V.Singh.
3. Further the material supplied by the Income Tax department contains files and details of iron ore transportation. These details include from (location), to (location), number of trips, quantity, etc. This sheet pertains to the period July 2010. Particulars found in the said sheet is extracted in Chapter-12 of Dr. U.V. Singh’s Report.
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4. Further the file containing some sheets with details of iron ore transportation which gives the particulars of loading, unloading and the names of the parties such like MM, SM etc., It is to be noted that the word SM indicates Swastik Nagaraj (Safia Minerals) and MM indicates Karapudi Mahesh (Sri Manjunatheshwara Minerals). All the above particulars could be seen from Table-1, 2 and 3 in Chapter-12 of the report of the investigating team.
5. Further the materials given to this Institution by the Income Tax department as a sheet with the headings pre- printed with “EAGLE, ILC & Y MINERALS” gives the particulars of the iron ore transportation. This is found at Table - 4 of Chapter-12. The material given by the Income Tax department also contains sheet with heading “STAR PLOT, TIRUMALA PLOT & OWN TRADING”. This also gives the information with regard to the iron ore transportation between loading and unloading points. This is found at Table - 5 in Chapter-12 of Dr.U.V. Singh report.
6. Further some sheets containing details of iron ore transportation with details of DATE, LDO, PARTY NAME, FROM, TO, NUMBER OF TRUCKS, M TON, S TON, M+S TON, TNS and also starting and destination points which is found at Table - 6 of Chapter-12 in the report of Dr. U.V. Singh. Another sheet found in the document obtained has a heading “From SBM (PK Halli) Plot to Belikeri & Karwar”. This sheet contains details of iron ore transportation of 20,161.66 MT of Fines – Fe 62.5%+ from SBM (PK Halli) Plot to Belekeri & Karwar vide 848 trips between 17.4.2010 and 6.5.2010. From the above materials found from the various documents, particulars of which have been extracted in the reports
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submitted by the investigating teams, following conclusion can be drawn –
(1) Transportation of iron ore between the above starting and ending points were without permits and hence all the iron ore is illegally extracted and transported and also sold.
(2) Use of pre-printed forms shows that Transportation of illicit iron ore was a planned and organised activity.
(3) Number of beneficiaries are fairly large and include many domestic industries like JSW, Kalyani, Kirloskar, Satavahana etc.,
(4) Some of the loading points are stockyards involved in illegal iron ore activities. Many of the loading points are illegal points of loading.
(5) The business was conducted primarily by two entities viz., Swastik Nagaraj and Karapudi Mahesh. SM (Safia Minerals) and MM (Sri Manjunatheshwara Minerals) were involved in transport of illicit iron ore by fake/forged permits to Belekeri port as discussed in Chapter-2 of the Report submitted by the investigating team.
(6) Documents also show money transaction among various parties with regard to transportation of iron ore. The documents also point to sharing of profits among various parties including SM and MM.
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7. Documents referred to at A to G in the report of the investigation team provide a glimpse in to the extensive scale of illegal iron ore transportation without permits or may be use of forged/fake permits etc., The tables 1 to 6 listed in Chapter-12 of the report of Dr. U.V. Singh are not exhaustive and merely pertain to a short period which indicates that a large number of parties are active in this illegal business of iron ore which included a number of domestic sponge iron and steel units. The investigation team has also made some comments about the contents of file No.A/SN/7/132/25.10.10. According to them the file contains details of “Iron Ore dispatches from Star Plot to Krishnapatnam with regard to Swastik Steel Hospet Pvt Ltd Hospet”. The details include DATE, LOADING FROM, TRIPS, QUANTITY etc.,
8. As per the record, 71,661.513 MT of iron ore was transported to Krishnapatnam from various loading points including STAR Plot, LMC, JSW, SAI KATA, Baba etc between 17.6.2010 and 3.8.2010. Further 29,630 MT of this quantity was exported by vessel “MV Port Moresby” and 40,101 MT by vessel “MV Sattar” from Krishnapatnam port.
9. From the above it could be safely concluded that the export of said quantity of iron ore via MV Port Moresby and MV Sattar by M/s.Swastik Steel Hospet Pvt. Ltd has taken place and it is also confirmed from the Customs and Port data. The materials was exported through shipping bills Nos.517/10-11 dated 30.7.2010 and 569/10-11 dated 12.8.2010 respectively. The date of departure of vessel MV Port Moresby was 13.8.2010, while date of departure of vessel MV Sattar was on 21.8.2010 as per the port data.
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10. The export realization against these shipments is confirmed from the “ENC data of the RBI”. An amount of $ 26,16,922 and $ 45,77,856 was realized through the Authorised Dealer Bank (AD Code 6120090). The rupee value of realized amount was approximately Rs.32.37 Crore @ Rs.45 per US Dollar.
11. As per the permit records, no permits were issued to M/s.Swastik Steel Hospet Pvt Ltd from the loading points and the date mentioned in the seized document for transportation to Krishnapatnam port except for 5280 MT from Star Minerals. This clearly indicates that almost the entire shipments comprised of illicit iron ore and should be recovered with exemplary penalty and other actions under various applicable laws. In addition to the two export consignments discussed above, information from Customs shows that M/s.Swastik Steels Hospet has sent 2 more export consignment to China from Belekeri port in 2010. The details are in Table 7 of Chapter12 of Dr. U.V. Singh’s Report. As the two mentioned exports from Krishnapatnam are strongly suspected to be composed of illicit iron ore, it is recommended that the source of iron ore for the two exports through Belekeri should be probed further. It can be noted that these exports were done just after seizure of iron ore at Belekeri port. For more particulars, the contents of Table - 7 of Chapter-12 of Dr. U.V. Singh may be looked in to.
12. From the documents received as file No. A/SW/7/132/ 25.10.10 at sheet page No.48, details of iron ore transportation from JSW to Autonagar, LMC to Star and JSW to Baba Plot in July 2010 are found. The quantity transported from JSW to Autonagar was 28,212.63 MT, from LMC to Star was 19,757.14
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MT and from JSW to Baba Plot was 32,803.61 MT. No permits were issued for the said source and destination points during that period. The source points are neither registered stockyards. LMC is a Mining lessee in NEB Range. Hence the entire transported material is taken as illegal. It is learnt that there is an illegal stock yard by the side of JSW premises run by Sri Swastik Nagaraj and Karapudi Mahesh and their Associates. At Sheet 1–15, contain information with regard to supply of iron ore for Eagle by SM & MM. The total quantity of iron ore supplied for Eagle by SM and MM as compiled from the file is 5,88,808 MTs between 13/3/2010 and 9/7/2010. The sources of these material mentioned under the hearing Plot wise are given in Table 9 of Chapter 12 of Dr.U.V.Singh’s Report. A perusal of file No.A/DP/13/25/10/10 and Computer files of K.V.Nagaraj and Dadapeer (SLVM Laptop), it is seen in the computer files, there is a folder named “DATA OF DADA PEER / DATA OF SLVM-LAPTOP/XLS”. This file folders contain details of day-wise iron ore transportation, which occurred among various source and destination points between Nov. 2009 and June 2010. The data were analyzed and it is noted that a total of approximately 20 lakh MT of iron ore was transported during the said period.
13. A large number of loading points mentioned in the files are neither mining leases nor registered stockyards. This shows that the entire materials transported to various destinations are illicit. The list of such loading point destinations and names of the parties are mentioned in Annexure-4 of Chapter 12 of Dr. U.V. Singh’s Report.
14. In addition there are many loading points mentioned in the said files which are either mining leases or registered
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stockyards. However it was observed that no permits were issued from such loading points for the destinations, date and for the parties mentioned in the files. This clearly indicates that the said material was also extracted and transported illicitly.
15. Further the files also mention transport of material from loading points in Chitradurga and Gadag. It is to be noted that there are no approved iron ore leases in Gadag district. All such iron ore is illegal.
16. Further ten files contain details of iron ore transportation from LMC to Jindal. The total quantity transported from LMC (indicating Lakshminarayan Mining Company) to Jindal (indicating JSW) was 27,024.39 MTs during June 2010. The permits did not match with the transportation of iron ore from LMC to Jindal for the said period. Hence the entire transported quantity is illicit. This transported quantity could be part of the iron ore that was illegally extracted from LMC as discussed in Chapter-9 of investigating team’s report.
17. File No.A/SN/4/132/25.10.10. Pages 3 – 4 under the heading “OMC TPT” (OMC indicating Obulapuram Mining Company) contains iron ore transportation details from LMC (indicating Lakshmi Narayan Mining Company) to Jindal (indicating JSW) between 02.6.2010 and 13.6.2010. Total quantity transported adds up to 38,286.06 MTs. Permits did not march with the transportation of iron ore from LMC to JSW. Hence the entire material is illicit. Misuse of permits issued for ML No.2186 of BR Yogendranath Singh cannot be ruled out for transportation of this illegal iron ore. Sheet 4 contains money transfer details under the heading 2/7/10. The details are “920 75.00 L/recd 428927 SBI”. Bank account of Adi Shakti Transport in Vikas Souharda Bank Hospet confirms the
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payment of Rs.75 lakhs to Adi Shakti Transport from Janadevi Minerals (A/c. No.31189482023-SBI Hospet) on 3.7.2010. Further investigation is required to locate the source of this money. This transported quantity could be the part of the iron ore that was illegally extracted from LMC during 2010. The subject of illegal extraction of iron ore from LMC in the account of Obulapuram Mining Company (OMC) during 2009 and 2010 has been separately dealt with in Chapter-9 of the report of investigating team.
18. File No.A/DP/10/25.10.10 contains a statement with the heading “Eagle” in which details of transportation of 3,06,147.415 MT of iron ore for the period from September to November 2010 along with some financial details are mentioned. There are no permits with Eagle as party during the said period. This indicates supply/transaction of illicit material by Swastik Nagaraj and others to Eagle Traders.
19. This file at pages 42 contains a copy of the invoice dtd.3.12.09 (Lorry No.KA 34/3535) for transportation of 17.00 MT of iron ore from V.M.(indicating Veeyam Mines) to M.R.K. (indicating MRK Stockyard) by Sri Manjunatheswara Transport. It is to be noted that there are no permits issued to Veeyam mines after 2007-08. This clearly indicates that the material was illicit.
20. The same file contains multiple sheets which show transactions from SM to MM with names of Swastik, Jambunath, Mahesh etc. They have been mentioned as Risk amounts in various places which clearly indicates that these are towards transactions with regard to supply/ transportation of illicit iron ore among SM (indicating Swastik Nagaraj), MM (indicating Karapudi Mahesh), Sri Jambunatheswar and others.
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The details pertaining to reconciliation of payments between Sri Karapudi Mahesh and Swastik Nagaraj are at Page Nos.25 to 29 of this document contain the following information –
(a) There are date wise monetary transactions among various parties. The use of terms like “risk”, “commission” etc., clearly indicates that these are transactions with regard to the illicit iron ore material which is being supplied/transported/ stocked etc.,
(b) Amounts have been arrived at by multiplying the quantities with rates like Rs 110/MT, Rs 5/MT etc., This clearly indicates the rates at which different transactions with regard to the illicit material was carried out among various parties.
(c) The records indicate that money was withdrawn through self-cheques and distributed in cash to many parties. Most of the self-cheques shown in the record have been verified in the three accounts (Axis bank, Hospet branch, Account No.267010200016667, 618010200003681, 618010200006606) of Sri Laxmi Venkateshwara Minerals.
(d) One such reference mentions “May to August Risk amounts Gift to Suresh Babu” with Rs 25,00,000 and number “051932” mentioned against this transaction.
On verification of the Axis Bank account of Sri Laxmi Venkateshwara Minerals (Account
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No.267010200016667) it was found that Rs.25,00,000 was withdrawn through a self Cheque No.051932 from the Axis bank account No.267010200016667, confirming the above stated transaction. Similarly there is one more transaction which mentions Rs.5,00,000 against Suresh Babu along with reference of a self cheque No.051929. The same amount was also verified to have been encashed through the said cheque from the same Account.
(e) It also contains transactions against the name of Ali Khan. These have been mentioned in few places as “commission” being paid at the rate of Rs 2/MT. It is to be noted that the involvement of Ali Khan who is the Managing Partner in Devi Enterprises in the illicit iron ore trade has been discussed in Chapter-9. It also contains money transactions against names of Y Minerals, Maheshanna (indicating Karapudi Mahesh) etc. All this clearly indicates towards complex interlinkages with regard to role of a group of persons closely related and associated in this illegal and unlawful mining activities.
(f) The said transaction records contain terms like “Hawala Bellary” which also indicates that the money from the illicit business was being pumped in to illicit non-banking channels as well. The Hawala money is also reflected in the file of Karapudi Mahesh dealt separately in this report.
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(g) Sheet page number 40, with heading Ashwathnarayan Singh & Co, contains information of movement of 50,199 MT of iron ore fines, in the period 8th Jan 2010 to 9th Feb. 2010, from Mahalaxmi Plot (indicating stockyard of Ashwathanarayan Singh & Co) to Belikeri and Karwar. On verification with the permits of DMG it was found that no permits were issued from the said plot for the said destinations in the period mentioned above. On verification with the seized computer files of SMSPL it was found that in the said period material was received in the Belikeri port with supplier mentioned as DLC Mahalaxmi, Mahalaxmi etc. This clearly indicates the source of material as Mahalaxmi plot in account of exporter DLC. This clearly indicates that the above mentioned material was illicitly transported and exported by Dream Logistics Company (DLC).
From the examination of the seized documents, it is seen that following companies/entities/firms are in the business of illegal iron ore and are associated or have close business links with Swastik Nagaraj, Karapudi Mahesh and others. In the light of the fact that the documents provide transactions details of illicit iron ore, the activities of these companies need to be probed further. 1. Adishakti Cargo Movers 2. Adishakti Transport Company 3. Ayyappa Industries 4. Fabio Exports 5. Swastik Steels (Hospet) Pvt Limited
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6. Swastik Steels 7. Ayyappa minerals 8. Swastik Cements Minerals Company 9. Star Minerals 10. Shri Bhakta Markandeshwara Minerals 11. Sri Srinivasa Minerals 12. Greentex Mining Industries Limited 13. Sri Lakshmi Venkateswara Minerals 14. Sri Manjunatheshwara Minerals 15. Jambunatheshwara Transport 16. Jambunatheshwara Minerals 17. others.
21. With the above facts and circumstances, the following conclusions are drawn by the investigating team of Dr.U.V. Singh:
1. Documents provide a glimpse into the extensive scale of illegal iron ore extraction and transportation without license and permits or maybe use of forged or fake permits etc during the period 2009 and 2010. The available details merely pertain to a short period and highlight that a large number of parties were active in this alleged illegal business of iron ore which included exporters, number of domestic sponge iron and steel units.
2. The business of transport/trade of illicit iron ore was conducted primarily by Sri Swastik Nagaraj (KV Nagaraj) and Sri Karapudi Mahesh. 3. The illicit iron ore was supplied both for domestic users and for exports mainly through Krishnapatnam and Belekeri ports.
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4. The exporters to whom illicit iron ore was supplied included ILC, SB Logistics (SBL), Dream Logistics (DLC), Obulapuram Mining Company (OMC), Arshad Exports and others.
5. The names of traders to whom illicit iron ore was supplied/ purchased included Eagle, SMSK, Devi Enterprises, Lakshmi Aruna Minerals (LAM), Y Minerals, SMM and others.
6. The regular recipients of illicit iron ore were ILC, Eagle, Y Minerals and others.
7. The domestic beneficiaries of illicit extraction transport and trade include JSW, Kalyani, Kirloskar, Satavahana, GRMTC and others.
8. The leases and their stockyards from where illicit iron ore was sourced included SVK Vyasankere (SB Minerals ML No 2515), SVK NEB Range A & B Block (SB Minerals ML No 2550), VENAG (Shantalakshmi Jairam ML No 2553, VEEYAM Private Limited ML No 988, Lakshminarayana Mining Company ML No 2487, Muneer Enterprises ML No 2339 , Trident Minerals ML No 2315, Ashwathnarayan Singh & Co ML No 2531, Bharat Mines & Minerals ML No 2245, Bellary Mining Corporation ML No 2651, Hothur Traders Ml No 2313 and others.
9. Many loading points mentioned in the file are registered stockyards which are involved in illegal activities. The names of such stockyards include MRK Stockyard, Clarita Marketing Services,
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Mahalaxmi Plot, ILC Plot, Star Plot, Kineta Minerals and Metals Plot, Red Rock Plot, Zest Enterprises and others.
10. Many loading mentioned in the file are unregistered and unauthorized points of loading of iron ore. These include Baba plot, PVG Plot, Anji Plot, Tirumala Plot and others
11. There was transport of illicit iron ore from loading points in Chitradurga and Gadag also. It is to be noted that there are no approved iron ore leases in Gadag district.
12. The documents indicate payments of risk for movement of illicit iron ore.
13. In the seized documents certain quantities of iron ore is stated which is not backed by the permits or legal documents. All such quantities should be considered as illegal iron ore and recovery of market cost with exemplary penalty should be collected following due course of Law.
14. As per the seized record, 71,661.513 MT of iron ore was transported to Krishnapatnam from various loading points including STAR Plot, LMC, JSW, SAI KATA, Baba etc between 17-06-2010 and 03-08- 2010. Further it is mentioned that 29,630 MT out of this quantity was exported via vessel name “MV Port Moresby” and 40,101 MT was exported via vessel name “MV Sattar” from Krishnapatnam port. It is noted that permits were issued only for 5280 MT in
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favour of Star Minerals the rest of the quantity should be treated as illegal and an amount of $ 26,16,922 and $ 45,77,856 should be recovered with exemplary penalty.
15. Further investigation should be done to find out the total illegalities involved and loss to State for the remaining exporters, companies, firms, individuals, local steel plants and others.
22. The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
23. Action should also be taken against all those who are involved in the illegal mining including use of forged/fake permits for transportation/exportation of iron ore, charging risk amount, etc., under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
24. The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
25. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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13
EXPORT OF ILLICIT IRON ORE BY I.L.C. INDUSTRIES LIMITED, BANGALORE
1) M/s. ILC Industries Limited, having its address at No.835/64, Shop No.F-2, 4th Block, Rajajinagar, Bangalore, Karnataka 560 010 is a Private Limited Company. It has been assigned an Exporter IEC Code 0703015311, by the Director General of Foreign Trade on 16/12/2003.
2) The exports of entire iron ore by the Company in different years through different ports have been perused as reflected in Table-1 of Chapter 13 of the report of Dr. U.V. Singh’s team, which shows that between 2006-07 and August 2010, this company has exported from Belikeri port 15,58,657 MTs of iron ore; from Karwar port, 3,98,459 MTs or iron ore; from Krishnapatnam Port, 19,02,413 MTs of iron ore; and from Mangalore port 4,70,671 MTs of iron ore, thus totally from the above 4 ports, this company has exported for the above said years 43,30,200 MTs of iron ore. If the export made during the period 2008-09 to 2009-10 is seen, it indicates that the said company’s export grew up by 140% i.e., from 8.25 Lakh MTs to 19.7 Lakh MTs and much of the exports was through ports of Belikeri and Krishnapatnam. It is to be noted here that the illegalities at Belikeri and Krishnapatnam ports are comparatively much more than the other ports referred to herein above.
3) Further, the company started exporting iron ore through Krishnapatnam port from 2008-09 and from 2008 till August 2010, exports through Krishnapatnam constituted over 50% of the total exports by the Company during the relevant period. Exports through Belekeri port constituted 30% of the total exports by the company. As against the exports, the permits
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issued to the company as party for different ports during the same period shows that the permits issued to export from Belikeri was for 2,68,896 MTs; from Karwar port was for 1,81,060 MTs; from Krishnapatnam port was for 5,70,606 MTs; and from Mangalore port was for 1,40,452 MTs. Thus the total permits issued for export from this company was only for 11,61,014 MTs during the relevant period.
4) Table-3 of Dr.U.V. Singh’s report show that out of the exports made from all ports put together, for the year 2006-07 to July 2010 when compared with the permits granted, demonstrates that the quantity exported without permits comes to 31,69,186 MTs. This amply demonstrates that there is a wide gap between the permitted quantity and the exports made by the company.
5) The Lokayukta police had seized computer files at Belikeri port, which contain a daily truck inward reports, with details of suppliers, company, etc for the period from October 2009 to February 2010. The information is supplemented with the information obtained from Adani Enterprises and Sri Mallikarjun Shipping Company Limited for the period February 2010 to May 2010. The data shows that 8,60,333 MTs of iron ore was received at Belikeri port on account of M/s. ILC Limited during the above mentioned period. Month-wise quantity received and the permits used for Belekeri port by ILC Limited are found in Table-4 of Dr. U.V. Singh’s report. From the said table, it is seen that totally 8,63,333 MTs of quantity transported, the permitted quantity was only 2,19,816 MTs. Hence, there is a difference of 6,40,517 MTs, valued at US$ 6,64,15,207.73. An average of the export value of all consignments of ILC from October 2009 to May 2010 from all
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ports is US $103.69 per MT. In rupee terms this value comes to Rs.265,66,08,280 @ Rs.40/- per US $.
6) Further, the Customs Data of Belekeri port reveals that M/s. ILC Limited had exported 8,66,628 MTs of iron ore from Belikeri port during the same period. This quantity matches with the quantity received at Belekeri port on account of M/s. ILC Limited. The export details are given at Table-5 of Dr. U.V. Singh’s report. This clearly shows that M/s. ILC did not have permits for around 6,40,517 MTs of iron ore transported to and exported from Belekeri port during the period from October 2009 to May 2010.
7) Further, the daily truck inward details also indicate, in a few cases, the source of material along with the name of the company/supplier on whose account the material was received at the port. A verification of such records with the permits indicates that the material was illicitly transported from these sources. The Table-6 of Dr. U.V. Singh’s report shows the daily truck inward details and some of the sources from which material was transported without permits and exported in the account of M/s. ILC Limited.
8) As per the information in the Table-6, it is seen that 3,09,963.62 MTs of iron ore was transported without permits from the mining leases of S.B. Minerals (ML 2515), Trident Minerals (ML 2315), Shanthalaxmi Jayaram (Nagappa) Mines (ML 2533), and the ILC Stockyard at Bevinahalli and other stockyards of P.K. Halli. The source for the remaining quantity i.e., 3,30,553.68 MTs requires further investigation.
9) The computer files ‘stockdetails.xls’ having spreadsheets named “Stock” and “Commitment & Movements” among others
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contains details of iron ore quantity committed and dispatched to M/s. I.L.C. Limited, mines from which the committed quantity is to be supplied and details of financial transactions thereof. The spread sheet with name “Commitments and Movements” contains a table with heading “ILC-Quantity details”. This table shows a total commitment of 8,96,418 MTs of iron ore to M/s. ILC Limited. The mine from which this commitment has to be fulfilled is also indicated. These mines are OMC, indicating Obulapuram Mining Company, A Block, indicating “SVK, NEB Range, A Block, Jaisingpura 44.52 Ha – 111 acres” in the spread sheet “stock” in the same file. This refers to S.B. Minerals, (ML No.2550), VENAG (indicating Shanthalakshmi Jayaram, ML No.2553), Vyasarayanakere (Indicating S.B. Minerals, ML No.2515); MBT (indicating Mehaboob Transport Company ML No.2568), BMC indicating Bellary Mining Corporation, M.L No.) LMC, indicating Lakshminaryana Mining Company M.L. No.2487) and others. The Table 7 of the report deals mine wise commitments and dispatches as indicated in the file. From the above, it is seen out of the commitment, a total of 8,67,314 MTs has been shown as dispatched quantity and additional 5,00,000 MTs has been commitment against which dispatches have not been shown in the same sheets.
10) On verification with the permit data, it is found that there are no permits issued for the above quantity with M/s. ILC Limited as a party. Table – 8 of the report under the Heading “ILC- Amount details” contains information of amounts paid by M/s. ILC Limited for the committed/dispatched quantities with details of amount due, received, balance to receive, etc. It shows, an amount of 49.40 crores out of the total due amount of 85.40 crores has been shown as received. This amount is
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the payment towards 1,96,440 MTs and 2,80,796 MTs respectively.
11) From the seized file “Production Details (2) 1.xls” contains date wise dispatch of material extracted and transported from MBT (indicating Mehaboob Transport Company, ML No.2658) to Krishnapatnam on Account of M/s. ILC Limited. As per the contents of the file, between 20/9/2009 and 4/11/2009, totally 1,00,019 MTs of iron ore was dispatched to Krishnapatnam. This confirms the dispatch of 1,00,000 MTs of iron ore to M/s. ILC Limited as per the details given in spread sheet “Commitments & Movements” in the file “Stock Details.xls”. The permits did not match with dispatch quantities shown in Table- 8B of Chapter 13 of Dr.U.V. Singh’s Report, with ILC as party for the period mentioned in the Table. Thus it is clear that the entire 1,00,000 MTs of illicit iron ore sourced from MBT was exported out from Krishnapatnam port by M/s. ICL Limited.
12) Further, the computer file “portwise_details.xls” contains a spread sheet named “ILC – Final” among others. The spreadsheet has details of calculation for arriving at ex-mine price of iron ore, permit risk amount etc and shipment quantity exported from Krishnapatnam port during July-October 2009. The shipment details relate to the committed quantity as discussed in the earlier Para. The shipment quantities mentioned in the spreadsheet match with the actual export shipment of M/s. ILC Limited from Krishnapatnam port during July – October 2009 as per the Customs data. Further, a permit risk amount of 75/- per MT of iron ore is mentioned in the calculations. “Risk Material/Zero Material” refers to iron ore that is illegally extracted, transported and traded. “Risk amount” is the amount paid to facilitate the same. Moreover,
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the documents seized by Income Tax Department during their searches show that M/s. ILC has been making regular payment of “Risk Amount” to Karapudi Mahesh and others. The details have been dealt with in a separate chapter of this report. In view of the above, it is clear export shipments of M/s. ILC Limited from Krishnapatnam port during the said period comprised of illegal iron ore.
13) The export shipment of M/s. ILC Limited from Krishnapatnam Port, that are mentioned in the electronic file and which match with the Customs Data have been extracted from the report of Dr. U.V. Singh’s report as under:-
Sl. SB_NO SB_DT QUAN VESSEL Exporter No. TITY _NM MTS 1 250/09-10 03-07-2009 30000 MV Wren ILC Industries LimitedD-6, Near Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, Chennai NA Hospet
2 255/09-10 04-07-2009 15250 MV Wren ILC Industries LimitedD- 6/7,Near Industrial Estate,Dam Road,Hospet-583203NAHospet 3 259/09-10 08-07-2009 290 MV Wren ILC Industries LimitedD-6, Near Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 4 329/09-10 22-07-2009 50900 MV ILC Industries LimitedD-6, Near Equinox Industrial Estate, Dam Road, Seas Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 5 414/09-10 13-08-2009 70600 MV Iron ILC Industries LimitedD-6, Near Man Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 6 472/09-10 29-08-2009 46094 MV Spar ILC Industries LimitedD-6, Near Cetus Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 7 478/09-10 31-08-2009 50900 MV Nyala ILC Industries LimitedD-6, Near Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet
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8 535/09-10 17-09-2009 68050 MV ILC Industries LimitedD-6, Near Powerful Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 9 536/09-10 17-09-2009 43700 MV Zsq ILC Industries LimitedD-6, Near Star Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 10 633/09-10 13-10-2009 36000 MV ILC Industries LimitedD-6, Near Clymene Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 11 703/09-10 20-10-2009 4000 MV ILC Industries LimitedD-6, Near Clymene Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 12 735/09-10 27-10-2009 48856 MV Pax ILC Industries LimitedD-6, Near Phonix Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 13 740/09-10 30-10-2009 45425 MV Mippo ILC Industries LimitedD-6, Near Bonanza Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, ChennaiNAHospet 14 759/09-10 05-11-2009 55000 MV Bao ILC Industries LimitedD-6, Near Wealth Industrial Estate, Dam Road, Hospet, Karnataka A/c. M/s. Empire Minerals & Transporters, Chennai NA Hospet
14) The file “PHANI.xls” contains the details of payments made by M/s. ILC Limited against 1,00,000 MTs; 1,967,440 MTs and 2,50,000 MTs of iron ore. The spreadsheet is reproduced below.
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OLD ACCOUNT ILC- PAYMENTS OLD ACCOUNT 1LAKH ,OMC & A BLOCK
PARTY QTY RATE/MT C BILL AMOUNT DATE MODE AMOUNT PORTION OMC 50000 1200 600 600 60000000 15 June CHEQUE DEVI ENTERPRISES 2009 2.40 A BLOK 50000 1000 1000 0 50000000 24 June RTGS MADHU 2009 0.60 16 June C 2009 2.40 23 June C 2009 2.00 27 June C 2009 2.00 03 July C 2009 1.60
TOTAL 110000000 TOTAL PAID 11.00 DUE NIL AMOUNT 33000000
NEW ACCOUNT ILC- PAYMENTS FOR 196440 MT PARTY QTY RATE/MT C BILL AMOUNT DATE MODE AMOUNT PORTION AMC/OMC 100000 1000 25% 100000000 03 July 2009 C 3.00 V NAG 50000 1000 25% 50000000 10 July 2009 C 5.00 VYSANKERE 150000 1000 25% 150000000 19 July 2009 C 2.00 14 July 2009 RTGS 1.75 AMC 15 July 2009 RTGS 2.00 DEVI 20 July 2009 RTGS 1.00 SREE MINERALS 31 July 2009 RTGS 2.75 DEVI 09 August 2009 C 5.00 11 August 2009 C 2.00 GIVEN TO RAVI KALYAN TOTAL 24.50 PAID DUE NIL AMOUNT ILC- PAYMENTS FOR 250000 MT TOTAL DUE 60.00 DATE MODE AMOUNT 18 August 2009 C 10.50 18 August 2009 RTGS DEVI 3.40
TOTAL PAID 13.90
BALANCE DUE 46.10
C 75% 34.58 RTGS 25% 11.53
TOTAL AMOUNT DUE
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95.50 AMOUNT GIVEN 49.40 BALANCE TO RECEIVE
C 75% 34.58 RTGS 25% 11.53 46.10
15) From the above table, Dr. U.V. Singh’s team has arrived that 75% of the total value is paid through cash and only 25% is paid through the Banks. I think the concerned departments like Income Tax Department should take note of the same and the Government of Karnataka should also bring this to the notice of the Income Tax Department for further action.
16) According to the spread sheet shown above, for 50,000 MTs it is mentioned that the rate per MT is 1,200/- (Table-10 of Chapter-13 of Dr.U.V.Singh’s Report). Out of this “C portion” indicating cash portion is Rs.6 Crores, while the “Bill” indiating bank transaction is Rs.6.00 crores. In few other cases, entire receipts have been shown against ‘C portion’ while in few other cases “bill” portions have been shown as merely 25%. Thus, it is clear that only a small portion of the receipts is in the form of Bank transactions and a large number of receipts is obtained in the form of cash.
17) In the “Mode” column at Table-10, entries have been made showing RTGS, Cheque, C (indicating cash). In these RTGS and Cheque modes, the names of the parties i.e., Devi Enterprises, Madhu, Sree Minerals, AMC had received the payment along with the dates provided. On verifying the Bank accounts of the parties shown in the statements, Devi Minerals – A/c. No. 202011012661 of Ing. Vyshya Bank, Bellary; Sree Minerals – A/c. No.267010200007733 of Axis Bank, Bellary; and AMC (Ananthapur Mining Corporation) – A/c. No.267010200001694
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of Axis Bank, Bellary, is found that the money was received on the dates mentioned. Further, the ILC Limited’s Bank A/c. No.1082065634 of State Bank of India, shows transfer of 60.00 Lakhs to A/c. No.0010444917121 of SBI dated 24/6/2009 with remarks “Adv fr Bal 10,000 MTs.” A/c. No.0010444917121 in State Bank of India belongs of Obulapuram Mining Company (OMC). This confirms payment of 60,00,000/- on the same date mentioned against “Madhu” in the seized documents.
18) M/s. Devi Enterprises, Madhushree Enterprises and Sree Minerals are front companies of OMC. According to Dr. U.V.Singh’s team, this has been discussed in a separate chapter with supporting documents and the above mentioned documents establish that M/s. Devi Enterprises, Madhushree Enterprises and Sree Minerals are receiving payment on behalf of OMC. Further, a large chunk of payments is made in the form of cash. Moreover, the iron ore for which these receipts have been shown are part of the “commitment” as mentioned in another excel file “stock”. This clearly indicates that the material for which the money was received by various front end companies was being illicitly extracted and transported.
19) The investigating team examined the documents seized by the Income Tax Department during search proceedings in the case of Sri K.V.Nagaraj on 25/10/2010, which reveals a few sheets with pre-printed heading “EAGLE, ILA and Y.MINERALS” contain the entire iron ore transportation details between the following loading and unloading points.
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Loading and Unloading of illegal Iron ore with M/s. ET & L and ILC as party S Loading Unloading Party name No 1 Andra Plot Krishnapatnam Eagle (DLC) 2 TM Gujarat Eagle (SMM) 3 SVK (V) Krishnapatnam Eagle (LAM) 5 Nagappa Gujarat Eagle (SMM) 6 ILC Plot Gujarat ILC (Dinesh) 7 ILC Plot Bellary (Autonagar) ILC 8 Sudaka Plot Krishnapatnam Eagle (SBL) 9 VM Plot Krishnapatnam Eagle (SMSK) 10 VM Plot Krishnapatnam Eagle (SBL) 11 VM Plot Gujarat Eagle (Devi) 11 VM Plot Kalyani Eagle (Devi) 12 Nagappa Gujarat Eagle (SMM) 13 SVK (V) PKL Eagle (DLC) 14 SVK (V) PKL Eagle (SBL) 15 NEB ILC Plot ILC 16 Chatgiri Kalyani Eagle (OMC Anil) 17 SVK PKL Eagle (LAM) 18 VM Plot Krishnapatnam Eagle (SMSK) 19 ILC Plot Kalyani ILC 20 VM Kirloskar Eagle (Devi) 21 VM Satvahana Eagle (Devi) 22 Chatgiri Kalyani Eagle (Devi) 23 Others
The document shows that the transportation of iron ore between the above listed starting and end points was without permits and hence the iron ore quantities mentioned in the file were illegally extracted, transported and traded. The use of pre- printed forms shows that transportation of illicit iron ore was a planned and organized activity. This document further confirms the involvement of ILC Limited in transport of illicit material under “Risk”.
20) The investigating team received an anonymous complaint against the alleged illegal activities of M/s. ILC Limited, in which it is alleged that M/s. ILC Limited has two front companies viz., Elite Brilliant Limited and Mineral Embassy (HK) Limited, as exports buyers of iron ore. Both these companies, it is alleged, share a common address at Hongkong i.e., Suite 1508, 17-19,
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Empress Plaza, Chatam Road, South TST, Kowloon, Hongkong. Further, it is alleged that M/s. ILC Limited has some domestic front companies i.e., M/s. Mineral Embassy, M/s. SVM Nett Projects Private Limited and M/s. Janadevi Minerals. Further M/s. Mineral Embassy has sent an export shipment of iron ore from Krishnapatnam port in August 2010 even after the ban on export of iron ore by the Government. Further the complaint alleges links between M/s.ILC Limited, Mineral Embassy and OMC along with some documents as a proof. The complainant has other allegations against M/s. ILC Limited.
21) The enquiry by the team of Dr. U.V. Singh, revealed that M/s. Mineral Embassy, SVM Nett Projects Private Limited have made iron ore shipments. Similarly, M/s. Elite Brilliants is a consignee of exports by M/s. ILC Limited and M/s. Mineral Embassy (India). It is also confirmed that M/s. ILC Limited did export iron ore to M/s. Elite Brilliant as consignee from Krishnapatnam port in August 2010. The export details of Mineral Embassy and SVM Nett Projects Private Limited are as below:-
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Details of Export of Iron Ore by M/s Mineral Embassy & M/s SVM Nett Project Solutions Pvt Ltd
Shipping Shipping Total Port Vessel Name Name of the Exporter Name of the Consignee Bill No Bill Date Quantity
M/S.ELITE BRILLIANT LTD., M/S.ELITE BRILLIANT LTD., SUITE Belekeri 133/10 12-04-2010 51,000 MV MARYLISA M/s MINERAL EMBASSY 1508, 15/F, EMPRESS PLAZA, 17- 19, CHATAM RD SOUTH TST, KOWLOON, HONGKONG.- - SINOSTEEL INTERNATIONAL NACAO COMMERCIAL OFFSHORE LTD, ALMEDA DR. CARIOS MV SHANG WANG M/S SVM NETT PROJECT Belekeri 61/10 11-02-2010 55,800 D'ASSUMPCAO, NO. 180, 18 HAI SOLUTIONS PVT LTD. ANDAR E-F, EDIFICIO TONG NAM AH CENTRO COMMERCIAL MACAO M/S.MINERAL EMBASSY, M/S.MINERAL EMBASSY, F.NO.8, ASHWATHI M/S.ELITE BRILLIANT LTD., APARTMENT, 1ST FLOOR, M/S.ELITE BRILLIANT LTD., SUITE Krishnapatnam 127/10-11 04-05-2010 34,500 MV.IRENE VIVEKANAND NAGAR, BEHIND 1508, 15/F, EMPRESS PLAZA, 17-
RTO OFFICE, JOLDARASI 19, CHATAM RD SOUTH TST, GUDDA, HOSPET -583203 – KOWLOON, HONGKONG.- - HOSPET
M/S.MINERAL EMBASSY, M/S.MINERAL EMBASSY, F.NO.8, ASHWATHI M/S. ELITE BRILLIANT LTD., M/S. APARTMENT, 1ST FLOOR, ELITE BRILLIANT LTD., SUITE Krishnapatnam 133/10-11 05-05-2010 2,000 MV.IRENE VIVEKANAND NAGAR, BEHIND 1508, 15/F, EMPRESS PLAZA, 17-
RTO OFFICE, JOLDARASI 19, CHATAM RD SOUTH GUDDA, HOSPET -583203 – KOWLOON, HONG KONG- - HOSPET
M/S.MINERAL EMBASSY, M/S. ELITE BRILLIANT LTD., M/S. M/S.MINERAL EMBASSY, ELITE BRILLIANT LTD., SUITE Krishnapatnam 212/10-11 21-05-2010 71,050 MV.CHENG GONG F.NO.8, ASHWATHI 1508, 15/F, EMPRESS PLAZA, 17-
APARTMENT, 1ST FLOOR, 19, CHATAM RD SOUTH VIVEKANAND NAGAR, BEHIND KOWLOON, HONG KONG- -
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RTO OFFICE, JOLDARASI GUDDA, HOSPET -583203 - HOSPET M/S. MINERAL EMBASSY, M/S. MINERAL EMBASSY, FLOT NO. M/S. ELITE BRILLIANT LTD., M/S. 8, ASHWATHI APARTMENT, 1ST ELITE BRILLIANT LTD., SUITE Krishnapatnam 338/10-11 28-06-2010 33,000 MV. ANGLE 1 FLOOR, VIVEKANAND NAGAR, 1508, 15/F, EMPRESS PLAZA, 17-
BEHIND RTO OFFICE, 19, CHATAM RD SOUTH JOLADARASI GUDDA, HOSPET KOWLOON, HONG KONG- - - 583203 - HOSPET M/S. MINERAL EMBASSY, M/S. MINERAL EMBASSY, FLOT NO. M/S. ELITE BRILLIANT LTD., M/S. 8, ASHWATHI APARTMENT, 1ST ELITE BRILLIANT LTD., SUITE Krishnapatnam 341/10-11 29-06-2010 68,177 MV. YONG PING FLOOR, VIVEKANAND NAGAR, 1508, 15/F, EMPRESS PLAZA, 17-
BEHIND RTO OFFICE, 19, CHATAM RD SOUTH JOLADARASI GUDDA, HOSPET KOWLOON, HONG KONG- - - 583203 - HOSPET M/S. MINERAL EMBASSY, M/S. MINERAL EMBASSY, FLOT NO. M/S. ELITE BRILLIANT LTD., M/S. 8, ASHWATHI APARTMENT, 1ST ELITE BRILLIANT LTD., SUITE Krishnapatnam 342/10-11 30-06-2010 4,473 MV. YONG PING FLOOR, VIVEKANAND NAGAR, 1508, 15/F, EMPRESS PLAZA, 17-
BEHIND RTO OFFICE, 19, CHATAM RD SOUTH JOLADARASI GUDDA, HOSPET KOWLOON, HONG KONG- - - 583203 - HOSPET
TOTAL 3,20,000
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The particulars of export of Iron ore to M/s Elite Brilliant by Embassy Minerals and M/s. ILC Limited are as under:-
Avg Total Sale S Sale Month Shipping Shipping Quantity Name of the Rate N Port rate Vessel Name of bill no Bill Date (MT) Exporter during ($) Export Month ($) M/s. ILC INDUSTRIES LTD., M/s. ILC INDUSTRIES LTD., 06/10- 03-04- MV. CAPE Apr 1 Krishnapatnam 85.00 80000 D-No.6/7, NEAR 128.27 11 2010 COSMOS 2010 INDUSTRIAL ESTATE, DAM ROAD, HOSPET - HOSPET M/s. ILC 20/10- 07-04- MV. CHENG Apr 2 Krishnapatnam 127.00 35000 INDUSTRIES LTD., 128.27 11 2010 GONG 2010 HOSPET M/s. ILC 21/10- 07-04- MV. CHENG Apr 3 Krishnapatnam 127.00 35000 INDUSTRIES LTD., 128.27 11 2010 GONG 2010 - HOSPET M/s. ILC 26/10- 09-04- MV. CHENG Apr 4 Krishnapatnam 127.00 700 INDUSTRIES LTD., 128.27 11 2010 GONG 2010 HOSPET M/S.MINERAL EMBASSY, M/S.MINERAL 127/10- 04-05- May 5 Krishnapatnam 125.00 34500 MV.IRENE EMBASSY, F.NO.8, 130.19 11 2010 2010 ASHWATHI APARTMENT, 1ST FLOOR,
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VIVEKANAND NAGAR, BEHIND RTO OFFICE, JOLDARASI GUDDA, HOSPET - 583203 - HOSPET M/S.MINERAL 133/10- 05-05- May 6 Krishnapatnam 125.00 2000 MV.IRENE EMBASSY, - 130.19 11 2010 2010 HOSPET M/S. ILC INDS LTD., M/S. ILC MV. 205/10- 17-05- INDS LTD., DAM May 7 Krishnapatnam 105.00 36200 CONSTANTINOS 130.19 11 2010 ROAD, HOSPET, 2010 G KARNATAKA - HOSPET 212/10- 21-05- MV.CHENG M/S.MINERAL May 8 Krishnapatnam 120.00 71050 130.19 11 2010 GONG EMBASSY, 2010 M/S. ILC INDS LTD., M/S. ILC 226/10- 28-05- MV. ETERNAL INDS LTD., DAM May 9 Krishnapatnam 105.00 90500 130.19 11 2010 OCEAN ROAD, HOSPET, 2010 KARNATAKA - HOSPET 338/10- 28-06- M/S. MINERAL Jun 10 Krishnapatnam 120.00 33000 MV. ANGLE 1 125.97 11 2010 EMBASSY, 2010 M/S. MINERAL 341/10- 29-06- Jun 11 Krishnapatnam 100.00 68177 MV. YONG PING EMBASSY, 125.97 11 2010 2010 HOSPET 342/10- 30-06- M/S. MINERAL Jun 12 Krishnapatnam 100.00 4473 MV. YONG PING 125.97 11 2010 EMBASSY, HOSPET 2010 M/s. ILC INDUSTRIES LTD., M/s. ILC 570/10- 12-08- MV. POSEIDON Aug 13 Krishnapatnam 120.00 39600 INDUSTRIES LTD., 121.50 11 2010 V 2010 D-No.6/7, NEAR INDUSTRIAL ESTATE, DAM
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ROAD, HOSPET - HOSPET 107/09- 22-03- MV PREM M/S ILC Mar 14 Belekeri 110.00 80,160 105.85 10 2010 VIDYA INDUSTRIES LTD 2010 115/09- 30-03- M/S ILC Mar 15 Belekeri 128.00 28,750 MV RAAZI 105.85 10 2010 INDUSTRIES LTD 2010 01-04- 119/10- M/S ILC Apr 16 Belekeri 2010 128.00 22,500 MV RAAZI 128.27 11 INDUSTRIES LTD 2010
127/10- 06-04- M/S ILC Apr 17 Belekeri 135.00 50,800 MV JIN YAO 128.27 11 2010 INDUSTRIES LTD 2010 13/10- 12-04- M/S. MINERAL Apr 18 Belekeri 115.00 51,000 MV MARYLISA 128.27 11 2010 EMBASSY 2010 138/10- 22-04- MV MOKORA M/S ILC Apr 19 Belekeri 127.00 53,850 128.27 11 2010 COLOSSUS INDUSTRIES LTD 2010 152/10- 05-05- M/S ILC May 20 Belekeri 110.00 21,000 MV MOLITOR 130.19 11 2010 INDUSTRIES LTD 2010 154/10- 05-05- M/S ILC May 21 Belekeri 120.00 34,000 MV MOLITOR 130.19 11 2010 INDUSTRIES LTD 2010 158/10- 10-05- MV IMPERIAL M/S ILC May 22 Belekeri 115.00 51,850 130.19 11 2010 SPIRIT INDUSTRIES LTD 2010 159/10- 11-05- M/S ILC May 23 Belekeri 120.00 1,000 MV MOLITOR 130.19 11 2010 INDUSTRIES LTD 2010 162/10- 14-05- MV UBC M/S ILC May 24 Belekeri 65.00 29,000 130.19 11 2010 LUZON INDUSTRIES LTD 2010 167/10- 14-05- MV UBC M/S ILC May 25 Belekeri 65.00 1,500 130.19 11 2010 LUZON INDUSTRIES LTD 2010
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22) On perusal of the above table, it is seen that in a few cases, there is a wide difference in the sale price of iron ore charged by M/s ILC Ltd and the average sale price of exports during the month by all the exporters from all the ports. Exports shown at S No 1, 7, 9, 11, 12, 24 & 25 are alleged to be cases of export under invoiced.
23) Examination of bank accounts of several companies engaged in mining activities reveals large monetary transaction with M/s ILC Ltd. M/s ILC Ltd has one of its bank accounts in State bank of India with A/c No 10820656534. As the records indicate that M/s ILC is involved in trading and export of illicit iron ore, the business links of these companies with M/s ILC need to be investigated further by the Competent Agency. The list of such companies/firms is given below:
Bank Accounts and companies/ firms linked to ILC in iron ore trade (Illegally)
S Name of Name of Company Bank Account No No Bank Ananthapur Mining 1 Axis Bank 267010200001694 Corporation Obulapuram Mining 2 Axis Bank 267010200001700 Company Bachhawat Enterprises Pvt 3 Axis Bank 267010200005364 Ltd 4 BMM Ispat Ltd Axis Bank 267010200000295 Dream Logistics India Pvt 5 Axis Bank 618010200000222 Ltd 618010200003681 Sri Lakshmi 6 Axis Bank & Venkateshwara Minerals 267010200016667 Shree Mallikarjun 7 Axis Bank 272010200001359 Shipping (P) Ltd 8 Sri Ganesh Minerals Axis Bank 910020002746616 9 SVK Minerals Axis Bank 618010200000541 10 Swastik Steels Axis Bank 267010200017116 Yessar Trading 11 Axis Bank 618010200002196 Corporation
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ING Vysya 12 Madhusree Enterprises 202011012670 Bank Lakshmi Swastik Steels Hospet Pvt Vilas Bank 13 0298358000000189 Ltd Sarada
State Bank 14 SB Logistics 30799888242 Of India ING Vysya 15 Devi Enterprises 202011012661 Bank 16 Shafia Minerals
17 Lakshmi Aruna Minerals
18 Shri Jambunatheshwara
19 Siddheshwara Traders
20 Vyshnavi Minerals
21 Daksh Minerals
22 Others
15 Devi Enterprises
24. From the above facts and circumstances the investigating team has drawn the following inferences;
1. The ILC, Bangalore has exported a total quantity 43,30,200 MTs iron ore from various ports since 2006-07 to 2010.
2. Out of this quantity permits were issued only for 11,61,014 MTs. The remaining quantity 31,69,186 MTs is considered as illegal. Action should be taken to recover the cost equivalent to market value with exemplary penalty. Other contemplated action should be taken under the relevant Laws.
3. From the Belekeri port alone, about 640517 MTs of illicit iron ore has been exported during the period from October 2009 to May 2010. This is
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equivalent to Rs.265,66,08,280/- @ $103.69 per MT and Rs.40/- per US $. It should be recovered from ILC with exemplary penalty.
4. 1,00,019 MT of iron ore illicitly extracted and transported from Mehaboob Transport Company (ML No.2658) was exported by M/s. ILC during October – November 2009. The export value of this iron ore is computed to be approximately Rs.41,48,38,804/-. Action should be taken to recover this amount with the exemplary penalty after due process of law.
5. M/s.ILC connived with the “Mining Group” and received iron ore illicitly extracted and transported from, among others, SVK Mines (SB Minerals ML No. 2515), ILC Stockyard at Bevinahalli Koppal, Trident Minerals ML No. 2315, Stockyards at PK Halli and Nagappa Mines, (Shantalakshmi Jairam ML No. 2533) and others. Action should be initiated to cancel the lease grants for all the leases involved in this illegality.
6. Seized records show a total commitment of 8,96,418 MT of iron ore to M/s ILC Ltd. The mines from which this commitment have to be fulfilled are also indicated. These mines are SVK NEB A Block (SB Minerals ML No 2550), VENAG (Shantalakshmi Jayaram ML No 2553), VYASANAKERE (SB Minerals ML No 2515), MBT (Mehaboob Transport Company ML No 2568), BMC (Bellary Mining Corporation), LMC (Lakshminarayan Mining Company ML No 2487)
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and “OTHERS”. All the dispatch quantity from all the leases as stated in above paras should be considered as illegal and an amount multiplication of Rs. 2500 per MT or market value prevailing during the period whichever is higher with exemplary penalty should be recovered from the ILC and other beneficiaries.
7. The quantity exported without permits should be considered as illegal and cost equivalent to market cost prevailing during the period with exemplary penalty should be recovered from the ILC. Other contemplated action should also be taken.
8. As seen from the records, large portions of payments in trade of illicit iron ore were made in cash. The competent government authority should take note of it and take action under appropriate Law.
9. The activities of suspected “front companies” of M/s ILC viz. M/s Elite Brilliants, M/s Mineral Embassy and M/s SVM Nett Project Solutions Pvt. Ltd and cases of under-invoicing of export sales by M/s ILC as indicated in Tables 12 & 13 of Chapter-13 Dr.U.V. Singh’s Report of should be taken note of by competent authority for taking action under appropriate Law.
10. Further investigation should be initiated into the activities of various companies/ firms/ having large financial transactions with M/s ILC Ltd as indicated in Table 14 of Dr.U.V. Singh’s Report.
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25. The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
26. Action should also be taken against the Directors/ Managing Partners of I.L.C. Limited (present and past) and all those who are involved in the illegal mining including use of forged/fake permits for transportation/exportation of iron ore, charging risk amount, etc., under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
27. The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
28. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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14
THREAT TO MINING LEASES OF IRON ORE IN BHS REGION In my first report on illegal mining submitted in December 2008 it has been stated that the iron ore of the grade of average 60 Fe content would last for 20 to 25 years at the rate of extraction for the years of 2004 to 2007 in Bellary, Hospet, Sandur region (BHS). After submission of first report in 2008, the production including the illegal extraction has gone up manifolds. There were debates for and against about the reserve available in this zone in various forums. Keeping all the factors in to consideration including inspection of leases and discussion with experts in mining etc. it has been thought to bring this matter in the report with facts for immediate action.
2) The life of the leases has been calculated based on the IBM plan sanctioned and the rate of extraction (present production per year) going on. The Deputy Director, Mines, Hospet and Bellary have submitted the total deposition of the iron ore and the production during the year of 2009-10 and 2010-11. Based on their submission the life of the leases is calculated and it is shocking to note that the most of the leases will be running out of deposit of iron ore for the Fe content of 60 grades plus in a span of 3-12 years.
3) The consent approvals from the MoEF and also the IBM have been increased irrationally without keeping in view the total deposition of the ore in the leases and environmental damages. This unscientific and unsustainable extraction has caused a serious concern for the existing steel plants and plants coming up in the State in future. There is proposal for establishing the steel plants for about 15 to 20 million tons in addition to the existing plants in the State.
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4) The IBM plans are prepared by the lessees themselves and then taken approval from the IBM, Government of India. The consent of MoEF under the Environmental Protection Act has been given based on the approval of IBM. But it is not always mandatory. Arguments may be made that there are certain unexplored areas in the leases and also in this region. While discussing with some of the lessees on the spot they were in agreement about the reserve available in their mining leases of grade 60 and above. It was informed by them that the mineral of 60 plus Fe are likely to be exhausted as per the IBM approved plan. They have expressed the hope that the reserve of low grade with blended hematite quartz (BHQ) for another 10-15 years. It is pertinent to mention here that the new mines sanctioned in the area are also not having proper iron ore deposition for the Fe grade of 60 plus. Out of the total 94 leases (details given by Deputy Director, Hospet, Bellary) about 20 leases would have life of 20 years and above provided there is no further increase of production in quantity per year in these leases. Rest all are in “red zone”. The life is calculated from the date of consent of MoEF. In some leases it may even further reduce.
5) It is also to state that the consent given by the MoEF and Karnataka State Pollution Control Board is found quite arbitrary in many of the cases. The production is increased in some cases manifolds without looking into the reserve available, the life of the leases and the environmental impact. It is a common knowledge that the environment (air and water) is highly polluted in this region. Though self conducted studies may speak otherwise. Such type of arbitrary consent should be stopped forthwith. A specific opinion of the Mines Department should be taken by the Ecology and Environment department, MoEF and KSPCB. The production should not be increased
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arbitrarily for one year or so. There should be complete moratorium in the BHS Region to increase production. The present rate of production should be brought down keeping the 2002-03 as base year.
6) The details submitted by Deputy Director, Hospet in regard to expected life of leases in Forest land in Hospet and Sandur Taluk; expected life of leases in Revenue/Patta Land in Hospet and Sandur Taluk and also the expected life of leases in Revenue land in Bellary Taluk, is reproduced in Chapter 14 of the report of Dr. U.V. Singh. After going through the details submitted by Mines Department (based on the information of IBM) the following conclusions are drawn and recommendation are made by the investigating team.
1) To increase the duration of life of the leases for iron ore production, there shall be complete ban on the export outside the country.
2) Per year production for all the leases which are having life of 15-20 years shall be brought down to ¼ of the present production.
3) Per year production for all the leases which are having life of 10-15 years shall be brought down to 1/5 of the present production.
4) Per year production for all the leases which are having life of 1-10 years shall be brought down to 1/10 of the present production.
5) The overburden generated of the grade of 30-50 Fe shall be simultaneously used after having beneficiation.
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6) Illegal extraction shall be viewed seriously. If any illegal removal is found that mining lease shall be determined by following the law.
7) The upper limit of dispatch in BHS region shall not exceed to 25 MTs per year including low grade.
8) The quantification of low grade reserve or high grade reserve shall not be left to consultants and lessees. This should be done by the IBM and State Mines department.
9) The IBM shall consult the State Government before approval of mining plan of any of the leases. All plans shall be revisited and modified as suggested above. The State Government should take immediate action to revive the IBM plans.
7) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
8) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
9) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/-
(N.SANTOSH HEGDE) LOKAYUKTA
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15
ISSUES OF ROYALTY AND FOREST DEVELOPMENT TAX
In my first Mining Report itself I had noticed the absurdity in levying royalty, which was just a pittance when compared to what the lessee or the exporter gets from the sale of iron ore. Dr. U.V. Singh’s team has made some recommendations, which I recommend to be implemented. The said report also points out the cases where various permits were issued by forest department for some companies, which is detailed in a separate chapter of Associated Mining Company. There are some more examples, similar to non-recovery of FDTs. Therefore, immediate action to be taken to recover the FDTs from all parties, who have been given authorized permits without first collecting the FDTs and action should be taken against the defaulting officers.
1. Royalty on Ad-Valorem Basis (1) The Mines and Minerals (Development and Regulation Act, 1957 (MMDR) and the Mines Act, 1952, together with the rules and regulations framed under them, constitute the basic laws governing the mining sector. The relevant rules in force under the MMDR Act are the Mineral Concession Rules, 1960, and the Mineral Conservation and Development Rules, 1988.
(2) Sec 9 of the MMDR Act has provision with regard to royalty payment by the holders of mining leases. Schedule 2 of the Act provides for the rate of royalty payment in respect of various minerals including iron ore. The provision with regard to iron ore is reproduced below: “22. Iron Ore (lumps, fines & concentrates all grades): Ten percent of sale price on ad valorem basis.”
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(3) Sec 64 D of the Mineral Concessions Rules provide for the guidelines for computing royalty on ad valorem basis. The provisions under Sec 64 D are reproduced as below: “64D. Guidelines for computing royalty on minerals on ad valorem basis:- Every mine owner, his agent, manager, employee, contractor or sub-lessee shall follow the following Guidelines for computation of the amount of royalty on minerals where the royalty is charged on ad valorem basis, namely:- Guidelines: The Guidelines for calculation of royalty in typical cases are as follows, namely:- Case 1: all atomic and non fuel minerals and minerals other than aluminum, primary gold, silver, copper, lead, zinc, nickel and tin –
The Indian Bureau of Mines publishes ‘Monthly Statistics of Mineral Production’ which contains state- wise total value of each mineral produced during a month in a State. The State-wise average value for different individual minerals as published by Indian Bureau of mines in the ‘Monthly Statistics of Mineral Production’ shall be the bench mark for computation of royalty by the concerned State Government in respect of any mineral produced any time during a month in any mine in that State. For the purpose of computation of royalty the State Government shall add twenty percent to this bench mark value. This value shall be reckoned to be the sale price for the purpose of computation of royalty. Also the value of the minerals published in the latest published issue of the ‘Monthly Production’ will be deemed to be
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applicable for the mineral mined in the previous month, irrespective of when the royalty actually accrues. If for a particular mineral, the information for a State is not published in a particular issue, the last information available for that mineral in the State in a previous issue shall be referred, failing which the latest published information for the mineral for all India shall be referred.”
(4) Accordingly, royalty is being calculated based on the state wise average sale value of iron ore for different Grades published by Indian Bureau of Mines on a monthly basis in their “Monthly Statics of Mineral Production”. Since the introduction of Ad valorem rate of royalty on the minerals, IBM has been publishing the sale value/price of minerals for different states on a monthly basis.
(5) The procedure adopted by IBM for fixing the sale value of iron ore is found to contain numerous discrepancies. Given below are some of the observations in this regard:
(i) (a) The sale price of iron ore by IBM, is calculated as the weighted average price per ton of Pit’s Mouth Value (PMV) o the ore as reported by the top ten non-captive producers or actual number of non-captive producers whichever is less in monthly returns under MCDR 1988. This methodology is flawed as the sale value, in many cases, does not accurately reflect the market price of the iron ore.
(b) This is largely due to incorrect reporting by the producers, which may either be deliberate or due to an incorrect procedure, leading to suppression of PMV. This is clearly evident from the high variation in prices in respect of
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particular grades of iron ores. In a competitive market for the same grade of material the PMV derived from the end sale prices after taking into consideration deductions for transportation and other costs should not have large variations. Therefore the observed high variations indicate incorrect reporting.
(c) As an example, the monthly IBM rates for Grade 62-65% FE Fines for the period Jan 2010 to July 2010 have been compared with purchase rates of Grade 63% Fe Fines iron ore by M/s JSW Torangallu, Bellary district for the same period. The table prepared by Dr.U.V.Singh’s team shows the difference in the two rates and the consequent national loss of royalty to the government. (Table 1 of Chapter 15 of Dr. U.V.Singh team’s report) The permits issued during the same period from DMG Bellary and Hospet for ports as destination have been considered for computations of loss.
(d) The difference in the IBM rates (that are considered for calculation of royalty amount) with the prevailing purchase rates in the market as indicated from the purchase rates of M/s JSW, indicates a royalty loss of 76.48%.
(ii) It is observed that in a few cases the sale price, as fixed by IBM, for lower grade iron ore (e.g.62-65% Fe lumps) is much higher than the sale price fixed for higher grade iron ore (e.g. 65% Fe and above lumps). Further in a few cases the IBM sale price value almost doubles with a change in grade from 60-62% Fe Fines ( 1087 per MT in Feb 2011) to 62-65% Fe Fines ( 2052 per MT in Feb 2011). This is anomalous and highlights procedural flaws in calculation of sale price by IBM. Further such huge variation in sale prices between two adjacent grades besides being
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unrealistic encourages the lessees to report a lower grade of iron ore in order to avoid payment of higher royalty.
(iii) Further it is observed that there is a wide variation in Fe content with in a Grade. E.g. With Grade 62-65, the % Fe content varies from 62% to 65%. The market prices vary substantially with % Fe content in such high grades. However the sale rate calculated by IBM is uniform across the grade i.e. for % Fe content from 62 to 65 which is quite improper and unrealistic.
(iv) Moreover there is no systemic check to cross verify data submitted by the lessees to IBM.
(6) In view of the above, sale price values fixed by IBM are an under estimate in many cases. As a result the State Government is losing huge revenues in terms of royalty.
(7) The following suggestions are made to ensure that the IBM sale prices accurately reflect the market price of the iron ore:
(i) The present system of fixing the sales price by utilizing only the returns of top ten producers should be discarded.
(ii) In addition to the figures submitted by different lessees in Form – F & H, IBM should also take into consideration the following documents to arrive at the PMV prices. a. FOB Price from Customs b. Stevedores, Plot rent etc from concerned Port Authorities c. FOR price from RR copies/Railways
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d. Cost of loading, unloading, and transport from concerned lessees/local truck owners association etc. e. Copy of sale invoices f. Copy of buyer/importer agreement g. Sale price figures from other than pit head sales e.g. Bench mark prices of PSUs like NMDC, big corporate sector units like JSW Steel Ltd. Etc.
It would be fair to consider the highest price reported by a lessee (rather than the average of the prices reported by lessees) for a particular grade and type of ore for the purpose of calculation of royalty in a region. This could then be triangulated with the bench mark prices as mentioned above.
(iii) The sale price should be adjusted on a prorate basis for change in % Fe contents in high grade iron ore e.g. 62-65 Grade.
(iv) An audit of the statistical figures on price of iron ore (submitted by lessees), should be conducted to avoid wide variation in price of iron ores of identical nature and grade.
(v) Action should be initiated against lessees who are found to be suppressing facts or submitting erroneous figures with recovery of all consequential taxes, royalty, cess and others. (vi) The PMV and sale values submitted by the lessees and which have been considered for calculation for the IBM price should be made transparent and put in public domain.
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2. Need for accurate assessment of Fe in ad valorem royalty regime:
(i) In the ad valorem regime the assessment of Fe content should be made scientific and accurate, since a small change in Fe content leads to substantial differences in the royalty amount. It is learnt that due to these considerations lessees who till recently were claiming to have iron ores of very high grade in their mines, have started submitting documents to DMG stating that their present ore is of lower Fe content which is unlikely. During this investigation, further it is also observed that the Fe content is being analysed by the local private test labs and the private test labs in Goa by taking the samples provided by the lessees. The test labs do not collect the samples independently from the source, hence the entire testing procedure is dubious and should be done away with. The samples should be analysed by a Government Test Lab by drawing the samples at source. Once this is fixed any further variation should not be accepted without re-verification. Further, the Fe content should be re examined with the prices paid for by the end users of the ore. During this investigation, it has been observed that in a few leases, royalty is paid for low Fe grade resulting in loss to the government. Further enquiry is recommended in this regard through an independent audit.
3. Forest Development Tax (FDT)
(i) As per the notification dated 16/08/2008, provision has been made for levy of Forest Development Tax (FDT) on iron ore extracted from leases within forest area. As per the notification, FDT should be calculated “on the amount of consideration paid therefore, with regard to iron ore disposed of by the lease holder
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of mines and quarries situated in forest area by sale or otherwise.”
(ii) Presently the collection of FDT is being done as per a direction issued through a letter of Principal Secretary dated 23/08/2008. The letter states that the consideration, in case of export trade need to be based on amount shown in invoices, while in case where iron ore is traded for local use, the consideration is to be decided on the DMG/MML/NMDC rates whichever is higher. Some of the issues that need to be resolved in this regard are:
(a) It is to be noted, while collection of royalty is presently being based on the monthly sale value fixed by the IBM, the FDT is being collected based on invoices as well as rates of DMG/MML/NMDC. This anomaly of taking different sale values for assessment of royalty and FDT for the same iron ore needs to be resolved without further delay.
(b) The invoices submitted for assessment of the “consideration” in case of EXORTS can be easily manipulated by using undervalued invoice to a “front company”. Therefore the FDT should be collected provisionally based on the provisional invoices. The final settlement of FDT collection should be based on the final invoices, Bank realizations and FOB values as recorded in shipping bills.
(c) With regard to the iron ore traded for the LOCAL USE, it is observed that the DMG/MML/NMDC do not have monthly rates for all the categories and grades of iron ore. For the purpose of uniformity, it is suggested that IBM monthly sale rates for various categories and grades of iron ore may be adopted. However before that, IBM sale rates itself would need
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to be rationalized as per the computation process outlined in this chapter.
(d) The “consideration” needs to be decided based not only on the Pits’ mouth value (PMV) as declared by the IBM, but also on the figures of (Free on Board) FOB with deductions like cost of transportation, permit cost etc. also taken into account. This is methodology has been adopted by several large domestic iron and steel units for determining their procurement prices of iron ore.
During the investigation it has been observed that in few cases forest permits are issued without recovery of FDT on the said permits. M/s Associated Mining Company (dealt in a separate chapter on Associated Mining Company) and many more are examples in this regard. A further enquiry should be ordered in all such cases of non-recovery of FDT for taking further needful action.
3. The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
4. The Principal Secretary, Forest, Ecology and Environment should assess the non-recovery of FDT within 50 days and take appropriate action for recovery and also against the officials, who have failed to recover the FDT and issued the permits.
5. The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
6. The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or
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proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/-
(N.SANTOSH HEGDE) LOKAYUKTA .
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16
ILLEGALITIES IN M/S. JANTHAKAL ENTERPRISES ML NO. 593/993
1) A mining lease No.593/993 at Hirekandawadi and Tanigehalli Villages of Holalkere Taluk, Chitradurga Dist. was granted in 1965 in favour of one Sri K. Raghavendra Rao and further it is claimed by M/s. Janthakal Enterprises that the said mine has been transferred in its favour in the year 1967 though no Government Order is available in any file/ records of the State Government as well as with the lessee. The said mining lease has been renewed twice under Section 8 (2) of Mines and Minerals (Regulation & Development) Act (MMDR),1957 vide two notifications dated 23.08.2007 with retrospective effect on the same day with a gap of 22 years. The renewal had been approved by the Secretary of the then Chief Minister stating as (whether such approval is legally valid or otherwise should be taken note of): 3$U3p¨wLp®w5®w$Z¯8 &pwo]¦J Uxr¯]¸ w5®w$Z¯$LwJ3$L¹]~¹
2) It is to note here that the second renewal of the lease without having entered into the lease deed Agreement between the department and lessee is an incomplete process of the first renewal and in that respect the second renewal on the same day is not legally valid. However the second approval given as above is based on the recommendation of the Secretary, Mines. The copies of notifications (1 and 2) dated 23-08-2007 are enclosed here for ready reference (Annexure to Chapter 16 pages 1-10 enclosed to Dr. U.V. Singh’s report).
3) The approval under Forest (Conservation) Act, 1980, is not accorded so far due to insufficient records etc. and subsequently, certain problems, have arisen due to submission
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of forged documents purportedly issued from MoEF, New Delhi for permission of lifting of old waste dumps.
4) To mine in the leased area after lapse of lease period and without having approval under Forest (Conservation) Act, 1980 (FCA) and Environmental Protection Act is contrary to Law. To overcome this, the GPA holder Sri Vinod Goel of M/s. Janthakal Mining Company Pvt. Ltd (JMCPL)/Janthakal Enterprises (JE) (Annexure to Chapter 16 at pages 43-68 enclosed to Dr. U.V. Singh’s report) has hatched a conspiracy to do mining at the garb of lifting the stocks, which he claimed as “old dumps”. Sri Vinod Goel, GPA Holder of M/s. JMCPL, is native of Mumbai and having the office at Bangalore also. Sri Vinod Goel is also having another Iron Ore Mine in Tumkur District by name Hanuman Mines ML. No. 2220. It is to state here that Sri Vinod Goel is involved in another matter of grant of mining lease to M/s Shree Sai Venkateshwara Minerals (SSVM) which is separately dealt in this report. With this background it seems he has well established connections with the officials of Mines and Forest Departments, at the State and Central Government and also at Political level.
5) Sri Vinod Goel has forged two letters viz., J- 11015/19/2007-IA, II(m) dated 27-08-2007 and J- 11015/82/2008-IA, II(m) dated 14-02-2008 purportedly issued from the MOEF to the Authorized signatory i.e., Sri Vinod Goel, GPA Holder and to the Principal Chief Conservator of Forests, Aranya Bhavan, 18th Cross, Malleshwaram, Bangalore respectively (Annexure to Chapter-16 pages 17-20 enclosed to Dr. U.V. Singh’s report). These forged letters were submitted to the Mines and Geology Department and PCCF by Sri Vinod Goel along with covering letters requesting to grant permission
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to lift the iron ore claiming that the MOEF has granted permission to lift the old dumps. By virtue of these correspondences, the Director, Mines and Geology had issued an order allowing him to lift so called “old dumps” vide his letter no. 8uV( 88} 'J¸-$-{¸ 993: 2007-08 dated 11-09-2007 (Annexure to Chapter-16 at pages 99 enclosed to Dr. U.V. Singh’s report). Before issuing this order for lifting the iron ore it is relevant to observe the noting made by the Commissioner, Mines in the connected file. The relevant para no. 220 of the note sheet of file no. 8uV( 88} --$-{¸4/08-09 of the office of Director, Mines is reproduced herein: “220) 99 AML 84/ Janthakal Enterprises/ 11.09.2007
Discussed with AD(M). There is tremendous pressure from the Hon'ble Chief Minister office as well as Hon'ble CM spoke to me regarding issue of working permission, which is not at all possible in absence of Forest Clearance & Environment Clearance from the Ministry of Environment & Forests, Government of India. However the Government of India vide letter No. J- 11015/19/2007-IA.II(M) dated 27.08.2007 has given permission to lift about 1 lakh m tones of low grade Iron ore and Manganese with the condition that the old stacked dump to be removed in a scientific manner so that the Environmental hazardous due to erosion of the old dump are minimized. No fresh production activities or cutting of trees or forest grown during the course of lifting of the old material allowed. Lessee is also directed to comply with the condition imposed by their office as per Forest Conservation
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Act, 1980. No fresh mining production will be taken up without obtaining Forest Clearance.
There is tremendous pressure, repeated telephone calls. This case has been followed by Mr. Vijay Kumar; Suspended Police officer Mr. Daya Nayak of Maharashtra, Mr. Darshan Goel & Mr. Vinod Goel; from the date of Notification till now. They have been putting pressure hell and heaven and the Hon'ble CM also spoke to me thrice. I have to explain that nothing is pending in our office. Sooner the report received from the DD/Chitradurga, regarding availability of the old stocks, permission will be given.
There is procedure, to first get approval from the Commerce & Industries Department, Government of Karnataka, then communicate to the lessee & DD/Chitradurga and in this present case, Hon'ble CM has given ultimatum that the permission should be given within TWO HOURS, without loss of time. Therefore permission should be issued and directions should be given to the DD/Chitradurga to allow lessee to lift old dumps as it is already permitted by the Government of India, Ministry of Environment & Forests, letter dated 27.8.2007 with the above mentioned conditions should be strictly be complied.
Therefore one letter must be addressed to the Government for approval and another letter must be written to the DD/Chitradurga in view of the kind of pressure put up by the above mentioned persons on this office through the Hon'ble CM. Sd/- COMMISSIONER”
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6) The approval and issue direction to Deputy Director, Mines, Chitradurga for lifting the old dump without even having received letter from MoEF to his office under extraneous pressures is illegal and improper on his part.
7) The Government of India, MoEF vide their letter no. L- 1011/51/2009-IA. II(M) dated 01-12-2009 and L- 1101/51/2009-IA. II(M) dated 24-12-2009 have confirmed that no such communication had been addressed by the Ministry to M/s. Janthakal Enterprises (Authorised Signatory) and PCCF, Karnataka. (Annexure to Chapter-16 at pages 21 and 15 enclosed to Dr. U.V. Singh’s report). It is also been stated by them that there is no person by name Sri Irfan Saikh working in the section of Office of MoEF, New Delhi. Later on Sri Vinod Goel has also admitted that the letter dated 14-02-2008 allegedly issued from MoEF was not genuine.
8) After going through the contents of the letter dated 14-02- 2008 submitted by Sri Vinod Goel to PCCF, it has cropped suspicion about the genuineness of the said letter and had surfaced. Meanwhile, the letters and correspondences made by Sri Vinod Goel to PCCF office and from PCCF office to Government of India, MOEF and to State Government (FEE Dept.), were stolen from the files of the office of the PCCF. Further, it is noticed that the connected papers in the subject matter were also stolen from the office of the Principal Secretary to Government, Forest, Environment and Ecology Dept., M.S. Building, Bangalore. In this regard, the complaints have been filed from the office of PCCF as well as from the office of the Principal Secretary for “missing” of the documents after lapse of more than six months. It is submitted here that this subject is not only the case of “missing” of the records, but it is a case of
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theft of the records from the files and involvement of concerned officers/ officials cannot be ruled out. A proper enquiry should be conducted against all the officials/ officers at the office of the PCCF and also at the office of the Principal Secretary (FEE) under the Conduct Rules. It is learnt that no such action has been taken even after lapse of 3 years.
9) It is further stated that Karnataka State Pollution Control Board (KSPCB) has had a public hearing for the said mining lease to onward submission to MoEF for giving environmental clearance. Hearing had been conducted without involving the villagers of the Tanigehalli and Hirekandavadi villages where the mining lease is located. Not having involved the connected villagers whose stakes are there for grazing etc. and other effects of mining is a serious lapses and also extending favour to the lessee. However, it is learnt that MoEF has rejected the permission sought by the lessee after knowing the irregularities happened in this case and involvement of GPA holder in forged documents. It is stated here that the Commerce and Industries Department vide their letter no. CI 91 MMM 96 dated 30-09- 1996 has rejected the renewal application dated 22-06-1984 for ML No. 593/993 of the M/s Janthakal Enterprises on the direction in the Writ Petition No. 25827/1995 of the High Court of Karnataka for consideration of the application of the lessee. The lessee again went to High Court and got direction to consider case in 1997. Since then the matter was pending.
10) It is also noted that M/s Janthakal Enterprises has submitted the details of production for the years 1981-1983 indicating that 7900 MT of material was available in 1984. It is not known how the quantity of 1,17,800 MT has arrived as claimed by the lessee to lift and transport. This should be
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scientifically got measured and if there is any irresponsible measurement done by the concerned Officials action should be initiated against them.
11) Sri Vinod Goel on behalf of M/s Janthakal Enterprises filed a Writ Petition on 30-03-2009 before the Karnataka High Court WP No. 8094/2009 seeking the following reliefs:- “issue a writ of mandamus directing the respondents to permit the petitioner to lift the dumped material lying in the mining yard of ML 593/993 at Hirekandawadi & Thanigehalli village of Holalkere Taluk, Chitradurga District, by collecting the requisite fee and royalty.”
12) The above said writ petition has been disposed off in favour of the petitioner on 02-07-2009 granting the relief as sought by him. (Annexure to Chapter 16 pages 23 to 42 enclosed to Dr. U.V. Singh’s Report). Against the said order the State Government (Forest department) has gone to Supreme Court in special leave (SLP No. 33773-333774/2009). The connected contents of the order dated 15-04-2011 of the Hon'ble Supreme Court is reproduced as under:
6. The said writ petition came up for consideration before a division bench of the High Court on 24.4.2009 for preliminary hearing. The High Court directed issue of notice to the respondents and also issued an ex-parte interim direction to the forest department, to furnish the following details to the court:
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(i) What was the actual quantity of the dumped material available in the mining yard?
(ii) What would be the royalty, EPF, NPV which the writ petitioner was otherwise liable to pay?
(iii) What was the damage they had caused to the flora and fauna? And
(iv) What was the extent of afforestation, if the writ petitioner was liable to make it?
7. When the matter came up for preliminary hearing on 2.7.2009, the Government Advocate handed over to the court, a copy of the report dated 18.6.2009 submitted by the Deputy Conservator of Forests, Chitradurga Division to the Principal Chief Conservator of Forests, prepared in compliance with the order dated 24.4.2009.
The said report furnished the following information:
Q: What is the actual quantity of the available material:
A: There are 9 old dumps in the above ML area. The quantity of the material assessed by the Dept. of Mines & Geology is 1,17,800 M.T.
Q: Since when it is dumped and the damages caused thereto due to that dumping:
A: As per this records in the above ML no mining activities were carried out in the area since 1985. Due to dumping of the material, forest growth and
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vegetation in the area and surrounding streams are disturbed.
Q: What is the royalty, damages has to be paid by the petitioner?
A: The royalty is to be collected by the Dept. of Mines and Geology. Hence, the information is to be provided by the Dept. of Mines and Geology. The surrounding area about 12.00 Ha was damaged. As per the Hon'ble Supreme Court of India order dated 28/03/2008 in I.A. No. 826 in 566 with related I. As in writ petition (Civil) NO. 202/1995 the value of the damaged forest land is estimated at the rate of Rs. 8.03 lakhs per Ha. Hence, for 1200 Ha. the damages in mandatory terms amounts to Rs. 96.36 lakhs (Rupees Ninety six lakhs thirty six thousand only).
Q: The amount of Net Present Value, EPF to be paid by the petitioner
A: As per the Hon'ble Supreme Court of India order dated 28/03/2008 in I.A. No. 826 in 566 with related IAS in Writ Petition (Civil) No. 202/1995 the Net Present Value is to be paid by the petitioner is as follows:
Sl. Particulars Density Extent Rate of Amount No (in ha) NP (Rs. (Rs in . In Lakhs) lakhs) 1 Eco-Class Dense 80.94 8.03 649.9482 III
The Compensatory afforestation charges at the rate of Rs. 84,000/- per ha for 80.94 ha. amounting to Rs. 67,98,960/- (Rupees Sixty seven lakhs ninety eight
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thousand nine hundred and sixty only) if the user agency take action to transfer and mutate the 80.94 ha non-forest land in favour of the Forest Department. If the compensatory afforestation land is not available and the petitioner fails to identify and transfer non- forest land in favour of the forest department, double the amount i.e. Rs. 67,98,960 x 2 times = Rs. 1, 35,97,920/- (Rupees One crore thirty five lakhs Ninety seven thousand Nine hundred and twenty only) is to be paid by the petitioner to raise the compensatory afforestation in the forest land. Environmental loss may be assessed by the Environmental Department, Government of Karnataka. “ 8. At the said hearing on 2.7.2009, when the matter came up for further orders, the Government advocate appeared for respondents 1, 2, 4 and 5. There was no representation on behalf of the third respondent (MoEF, Government of India). As only a short time had elapsed after service of notice, the State and its forest and mining departments could not file their statement of objections. The Forest department claims that it could not even appoint a Litigation Conducting Officer nor furnish its parawise remarks to the counsel for preparing the counter-affidavit, for want of time. The High Court however allowed the writ petition by the impugned order dated 2.7.2009, with the following directions: “The petitioner is permitted to remove the dumped Iron ore quantified at 1,17,800 Metric Tonnes lying in the mining yard (M.L.No. 593/1993) situate at Hirekandawadi and Tanigehalli villages of Holalkere
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taluk, Chitradurga District, subject to the following conditions: (i) The iron ore which has already been extracted and quantified at 1,17,800 Metric Tonnes lying staked as on date, can be lifted by the petitioner upon proper notice to the Mining Authorities. (ii) On getting such notice, the Mining Authorities shall depute a competent officer, who shall remain present at the time of such lifting. (iii) Such lifting will take place in accordance with law and upon payment of required royalty to the State. (iv) The lifting operation must be completed within a period of six weeks from the date of receipt of this order or production of the certified copy of the order, whichever is earlier. (v) Petitioner shall make payment of the following amounts before lifting the dumped Iron ore: a) Royalty : Rs. 11,04,375/- b) Damage of forest land in monetary terms : Rs. 96,36,000/- c) Net present value, EPF For the entire area : Rs. 6,49,94,820/- d) Compensatory Afforestation charges. : Rs. 67,98,960/- OR Penalty on compensatory Afforestation charges if the Land is not available & if the Petitioner fails to Identify and transfer the non-forest land. : Rs. 1,35,97,920/-
e) Any other statutory dues vi) It is made clear that it is for the forest authorities to decide, whether Net present value as directed to be
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paid, is adjustable towards the approval under section 2 of the Forest (Conservation) Act.” 9. The first respondent thereafter filed an application seeking modifications in the order dated 2.7.2009. The said application was allowed on 27.8.2009, without giving opportunity to the State or Central Government to file their objections. Direction (iii) and onwards in the operative portion of the order dated 2.7.2009 were recast as follows: “(iii) Such lifting will take place in accordance with law and upon payment of required royalty and amount ordered to be deposited by this court, necessary permission for transport for lifting the iron ore shall be issued within thirty days of depositing the royalty and amount ordered to be deposited by the petitioner by this order. (iv) The lifting operation must be completed within a period of six months from the date of receipt of this order or production of the certified copy of the order, whichever is earlier. (v) Petitioner shall make payment of the following amounts before lifting the dumped Iron ore:- a) Royalty : 11,04,375/- b) Net present value, EPF for the entire area : 4,69,45,200/- c) Compensatory Afforesttion charges : 67,98,960/-
OR Penalty on compensatory Afforestation charges if the Land is not available and if The petitioner fails to identify and transfer the non-forest land : 1,35,97,920/- d) Any other statutory dues.
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vi) The petitioner shall be entitled to adjust the present amount to be paid as per the order towards amount payable as EPF for the purpose of granting permission under section 2 of the Forest (Conservation) Act”.
10. The said orders dated 2.7.2009 and 27.8.2009 are challenged by the State Government and its authorities in these appeals by special leave. The appellants contended that the following incorrect factual assumptions were made by the High Court, while disposing of the writ petition, which are not borne out by the record:
(a) That the material on record showed that first respondent was not carrying on any mining activities in Mining Lease Area No. 593/933, after coming into force of Forest (Conservation) Act, 1980 in the mining area;
(b) That that nine dumps of iron ore found in the mining lease area quantified at 1,17,800 metric tons had been validly extracted by the first respondent when the mining lease was valid and was in force (that is prior to 5.7.1985);
(c) That the respondents in the writ petition (appellants herein) did not dispute the claim of the first respondent that it had stopped the mining operations and only wanted to shift the dumped iron ore excavated prior to 1980. Therefore, the writ petitioner (first respondent herein) was entitled to permission to
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remove the 1,17,800 metric tons of dumped iron ore from the mining lease area.
(d) The state Government and the central Government conceded the claim of the first respondent.
11. We find considerable force in the contentions of the appellants. Neither the State Government nor the Central Government filed any counter nor did they have sufficient opportunity to file any counter. Nor did they concede any claim of the first respondent. Apparently, the entire order was passed on the basis of the report dated 18.6.2009 submitted by the Dy. Conservator of Forests, by assuming it to be an admission on behalf of the state government. But the report dated 18.6.2009 is only a report submitted by the Deputy Conservator of Forests to the Principal Chief Conservator of Forests in pursuance of an ex- parte interim order of the High Court. Even the said report does not state that the ore in the nine dumps was mined prior to the Forest (Conservation) Act came into force, but only states that there was no mining activity in the area since 1985. The said report does not say when the said ore was mined. In fact that information was not sought by the High Court. Significantly, apart from the said report of the Deputy Conservator of Forests, there is no other material to conclude that the material was mined legally prior to 1980, when the lease was in force or that the said quantity of dumped ore belongs to the first respondent or that the first respondent is entitled to remove or sell the said material. The first respondent had not placed any material to show that the said
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quantities of ore had been mined before the lease expired or that the said quantifies of ore had been mined before the lease expired or that the said quantifies of ore were lying at the site prior to 1980. No report was also called for from the Director, Mines and Geology which is the concerned department, or from the central government. The four questions in the order dated 24.4.2009, significantly do not refer to the following important aspects:
(i) When was the said material mined/excavated?
(ii) What is the grade (percentage of ore content) in the dumped ore?
(iii) Whether the first respondent was the owner of the dumped material?
(iv) Whether there was any impediment for removing the dumped material or transporting them?
The above questions can be answered only by the Department of Mines and Geology and not by the forest department.
12. The correctness and reliability of the report dated 18.6.2009 of the Dy. Conservator of Forests is itself doubtful and far from satisfactory. The inspection and verification was not done by the Dy. Conservator of Forests who had furnished the report. The Principal Chief Conservator of Forests informed the Dy. Conservator of Forests, about the ex-parte interim direction of the High Court, by letter dated 30.05.2009. IN turn, the Deputy Conservator directed the Assistant Conservator of Forests to given a report.
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The Assistant Conservator of Forests gave a report dated 16.06.2009 to the Dy. Conservator of Forests which was incorporated in his report dated 18.6.2009. There was not even an affidavit supporting or verifying the said report. The report appears to have been prepared rather casually and in a hurry.
13. There was unexplained delay and latches in filing the writ petition. The lease period came to an end on 6.7.1985. The writ petition was filed twenty four years later that is in the year 2009, seeking a direction to the State Government and Central Government to permit lifting of the ore by collecting necessary fee/royalty. Except stating that the dumped material had earlier no value, there was no explanation why for 24 years, no action was taken by the first respondent either to claim ownership in respect of the said “material” or remove the same. There was no material to show that the said material was of a grade of 62% to 63% or less. There was no material to show that the first respondent had informed the Mining Authorities or Forest authorities or the state government about the existence of mined ore in the mining area in nine dumps, either by way of returns, reports or otherwise. The first respondent had earlier produced a fake document dated 14.2.2008 wherein it was stated that the waste dumps (of one lakh tones) was not mined material but consisted of natural eroded soil and wastage thrown from neighbouring mines. Though first respondent subsequently admitted that the said letter dated
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14.2.2008 was a fake, it did not aver that the contents of the document were false and concocted. Thus at one stage before filing the writ petition, the first respondent claimed that what was sought to be removed was not mined mineral, but eroded soil and waste thrown from neighbouring mines. But in the writ petition, the first respondent claimed that the material in question was low grade ore mined by it when the lease was in force. The contradictory stands raise doubts about the claim of the first respondent.
14. The courts should share the legislative concern to conserve the forests and the mineral wealth of the country. Courts should be vigilant in issuing final or interim orders in forest/mining/Environment matters so that unscrupulous operators do not abuse the process of courts to indulge in large scale violations or rob the country of its mineral wealth or secure orders by misrepresentation to circumvent the procedural safeguards under the relevant statutes. The court should also realize that Central Government and the State Government are huge and complex organizations and many a time require considerable time to secure information and provide them to court, in matters requiring enquiry, investigation or probe. Where writ petitions involving disputed questions of fact in regard to forest/mining/environment matters, come up for consideration, courts should give sufficient time and latitude to the concerned ministries/departments to file their objections/ counters after thoroughly verifying the facts. If there
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is undue hurry, the concerned ministries/ departments will not be able to make proper or thorough verifications and place the correct facts. Instances are not wanting where the public interest will be sabotaged, by the officers of the state/central government who are supposed to safeguard the public interest, by colluding with the unscrupulous operators. A wrong decision in such matters may lead to disastrous results – in regard to public interest – financially and ecologically. Therefore, writ petitions involving mineral wealth, forest conservation or environmental protection should not be disposed of without giving due opportunity to the concerned departments to verify the facts and file their counters/objections in writing.
15. This case is a typical example where a writ petition requiring decision of disputed and unascertained factual allegations filed on 30.3.2009 has been disposed of on 2.7.2009 without giving due opportunity to the mining and forest departments of the State Governments and the MoEF, to file their counter- affidavits. When there was delay of nearly a quarter century on the part of the writ petitioner in approaching the court, the writ petition ought not to have been disposed of in hardly three months, without counter-affidavits from the concerned respondents. Even though there were no counter affidavits, nor any opportunity to the respondents in the writ petition to file counter-affidavits, the High Court assumed that the State and the Central Governments had conceded the claims of the first
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respondent in the writ petition and allowed the writ petition on 2.7.2009. Again, the High Court without calling for objections from MoEF or the state government, on an application by the writ petitioner, amended the final order and reduced the Net Present Value (NPV) from Rs. 6,49,94,820/- to Rs. 4,69,45,200/-. Anxiety to render speedy justice should not result in sacrifice of the public interest.
16. We are of the considered view that the High Court committed a serious error in hurriedly deciding seriously disputed questions of fact without calling for a counter and without there being any proper verification of the claim of the first respondent by the authorities concerned. The order of the High Court cannot be sustained.
17. We, accordingly, allow these appeals and set aside the order of the High Court and dismiss the writ petition filed before the High Court. We impose costs of Rs. 50,000/- upon the first respondent payable to the state government.
18. The learned counsel for first respondent submitted that this order should not come in the way of the first respondent seeking appropriate remedy in accordance with law. If the first respondent has any remedy in law or cause of action for seeking any remedy, this order will not come in the way of first respondent seeking such remedy in accordance with law. ………. J. (R.V. RAVEENDRAN) New Delhi ……….J. April 15, 2011 (A.K.PATNAIK)
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13) The Order of the Hon'ble Supreme Court in SLP Nos. 33773-333774/2009 dated 15.04.2011 is relevant to reproduce as above on account of the complexity of the matter and to know the sequential events and facts. As per para 12 of the said order the Hon'ble Supreme Court has expressed its displeasure the manner Deputy Conservator of Forests has submitted the report. Therefore action should be initiated against the DCF accordingly. Further the Hon'ble Supreme Court has also passed structures against the order of the Hon'ble High Court of Karnataka. The order copy of the Karnataka High Court is enclosed as (Annexure to Chapter 16 at pages 23-42 of Dr. U.V. Singh’s report).
14) There was a petition filed by one Sri G. Ravi stating that the mining lease in question has been sold by Sri R. G. Janthakal to Sri Vinod Goel by charging a cost of Rs. 3.01 crores. The details of cheques and drafts were given in the said petition (Annexure to Chapter-16 pages 11-13 of Dr. U.V. Singh’s report). The connected drafts and cheques were verified with the respective accounts of Janthakal Enterprises and it is found that the money has been credited in the bank account no. 06009010002741 of Syndicate Bank, Bellary. The copy of the said bank account is enclosed as (Annexure to Chapter 16 pages 91-98 of Dr. U.V Singh’s report in this regard).
15) A case under Section 420, 468 of IPC has been filed against Sri Vinod Geol (GPA Holder) in the Chikkajajur P.S., Chikkajajur, Holalkere Taluk, Chitradurga District. It is learnt that the investigation is stayed by the Hon'ble High Court and the matter is pending.
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16) A complaint was also filed at Sadashivanagar P.S. by the Administrative Officer of PCCF office for missing of the papers/ records after lapse of 6 months. The preliminary investigation has been conducted by the PSI Sadashivanagar P.S. and he has sent a report stating that the PCCF may initiate a departmental enquiry against the concerned officers/ officials for the missing of the records and the complaint is closed at their Police Station. The outcome of other complaints filed in M.S. Building is not yet known since there is no response from Government. On going through the copies of the complaints filed in M.S. Building as well as Sadashivanagar Police Stations regarding “missing” of the records, it may be stated here that they are not proper. There should have been a case of theft of records and a proper FIR.
17) Since, this is a matter of serious nature wherein a conspiracy is hatched for creating forged documents and subsequently theft of records to destroy the evidence to escape from the clutches of Law, a proper handling is required in the matter for prosecution. The connivance of the officers/ officials is very much evident while going through the whole episode. Hence, the facts would come to light only when a proper and in depth investigation is done by a Competent Authority for the theft of records from the office of Principal Secretary, Forest, Ecology and Environment and the office of Principal Chief Conservator of Forests, Aranya Bhavan, Bangalore.
18) It is to state here that after issue of permission by the Director, Mines Sri Vinod Goel had started working in the leased area. Two offence cases were booked by the officials of the Forest department and the same has been compounded by the Deputy Conservator of Forests. It is to state that offence case
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was booked against the unconnected persons and not against the original culprit. Hence the offence case filed was very weak and only for the sake of filing it.
19) The Director of M/s Twenty First Century Wire Rods Ltd made a submission before this office on 14-08-2010 regarding export of iron ore fines from Belekeri port and iron ore lumps from Murmagao port, Goa. (Annexure to Chapter 16 pages 69- 72 of Dr.U.V. Singh’s Report). As per this submission a total amount US $ 20,00,000 has been received as advance against the iron ore lumps exported from Murmagao port to Pakistan Steels, Karachi, Pakistan. The Director further submits that
“Against the commercial invoice of US $ 2741325.54 for export of Iron ore Lumps, Payment amounting to US $ 2645673.21 (including carryover of US $ 645673.21) were received and advances on various dates as mentioned above through our bank. There is a shortfall of US $ 95652.33 to be received from the buyer i.e. Alsaa Petroleum towards this shipment. As the buyer did not make this payment and raised quality issued after consuming the entire consignment.”
On verification of the records submitted by the Deputy Commissioner of Customs, Goa (Annexure to Chapter 16 pages 73-90 of Dr.U.V. Singh’s Report) it is to note that as per the shipping bill no. 5024498 dated 18-12-2009 and the performa invoice dated 16-12-2009 for IEC No. 0593019083, an amount of US $ 1319284.75 at the rate of 35 PDMT for the quantity of 37693.85 DMT is fixed as cost of the iron ore lumps of 61% Fe. This amount is a short by US $ 1422041.54 against the commercial invoice of the Company (i.e. 2741325.54 USD).
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This seems to be a case of under-invoicing and the Competent Authority should further investigate this matter.
20) As per the iron ore lumps supply contract dated 31-10- 2009 between M/s Twenty First Century Wires Rods Ltd, Sadashivanagar, Bangalore and the Alsaa Petroleum and Shipping FZC, RAK free trade zone UAE; the supplier is suppose to supply the lumps from the Sri Hanuman Mines and M/s Janthakal Enterprises, Karnataka (Annexure to Chapter 16 pages 101 to 107 of Dr.U.V. Singh’s Report in this regard). On verification of the permits issued by the Tumkur, Deputy Director, Mines; permit of 2992 MT is issued for RKB Plot, Santona Sanguces, Goa in the year of 2009-10. Even if this quantity is taken for export there remains a deficit of 36478 WMT. There is no permit issued from Janthakal Enterprises. This indicates that the export of iron ore lumps to Pakistan is from the illegal iron ore source. The iron ore lumps for export are either transported from Hanuman Mines or from the Janthakal Enterprises Mines or from any other unknown source illegally. The details of permits issued by Deputy Director, Tumkur are submitted herein.
Sl. Name of Permit Permit Qua Lum Party Destination No the Lessee No. Date ntity ps . MT 1 Hanuman 10974 15/12-2009 2992 2992 Self RKB Plot Mines ML Santona No. 2220 Sanguces Goa 2 Hanuman 86268- 05-10-2007 496 496 Jain Jain Udyog Mines 86298 Udyog Goa 3 Hanuman 82029- 27-09-2007 496 496 Self Jain Udyog Mines 82059 Goa
21) With the above said facts and circumstances the following conclusions are drawn by the Investigating team for further needful action.
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1) The second renewal accorded on 23-08-07 without having entered into lease deed Agreement for the first renewal under Section 8(2) of MMRD Act is improper and incomplete.
2) Sri Vinod Goel hatched a conspiracy to work in the lease area on the garb of lifting the “old dumps” by creating forged and fake documents purportedly issued from MoEF and bringing extraneous pressure to issue permission for lifting the “old dump”.
3) The two letters in favour of Authorised Signatory and Principal Chief Conservator of Forests purportedly issued from MoEF, New Delhi were forged and fake. The letters are no. J- 11015/19/2007-IA, II(m) dated 27-08-2007 and J- 11015/82/2008-IA, II(m) dated 14-02-2008 respectively.
4) The permission granted by the then Commissioner, Mines and Geology, Bangalore to lift the old waste dumps of iron ore under extraneous pressures was illegal, irregular and improper. The permission was granted even without receiving a letter from MoEF to him. No letter was addressed to him by MoEF. Action should be initiated against him by following due course of law.
5) The connected records were stolen from the files of the offices of Principal Chief Conservator of Forests (FC section) and Principal Secretary, FEE. No action was taken even after lapse of 5-6 months on
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this matter. No action is taken even today against the officers and officials responsible for it. No case of theft has been registered. Hence action should be initiated against all officers/officials responsible for this act of misconduct.
6) The lease No. 593/933 of M/s Janthakal Enterprises has been sold at a cost of Rs 3.01 crores to Sri Vinod Goel who is also a Proprietor of Hunuman Mines, Tumkur and M/s Twenty First Century Wire Rods Ltd. The money has been deposited in the Bank account No. 06009010002741 of Syndicate Bank Bellary of Janthakal Enterprises. This is in violation of Rule 37, 46 and 48 of the MCR 1960 therefore lease should be cancelled by following due procedure under the Law and the amount of Rs. 3.01 crores should be forfeited to State Government.
7) It is learnt that after having approval of Commissioner, Mines for lifting the old dumps of Iron ore, Sri Vinod Goel started working in the mines. The sign of working is available at the mine head even today. There were two offence cases i.e. FOC No. 8/2007-08 dated 13-09-2007 and FOC No. 35/2008-09 dated 28-09-2008 were booked against the irrelevant persons by the Section Forester. Both the offence cases have been compounded by DCF, Chitradurga without having in depth investigation. Both the cases should be investigated by the Department from an officer
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with known integrity and not below the rank of CCF.
8) The Hon'ble Supreme Court has passed strictures against the order dated 02-07-2009 WP No. 8094/2009 (GM-MM/S) of the Hon'ble High Court of Karnataka. It is to be noticed that Government which was a respondent in this petition did not even file a counter affidavit.
9) The Hon'ble Supreme Court has also passed strictures against the Deputy Conservator of Forests, Chitradurga. Appropriate action should be initiated against him for filing the report in the High Court without any order in this regard (in para 12 of Supreme Court judgment).
10) 37693.85 DMT of iron ore lumps had been exported from the Murmagao port to Pakistan Steel Mills, Karachi, Pakistan by M/s. Twenty First Century Wire Rods ltd, proprietor Sri Vinod Goel. Sri Vinod Goel submits that he owns two mines 1) Hanuman Mines, Tumkur and 2) Janathkal Mines, Chitradurga in a contract signed with consignee. Since for 2992 MT, permits were issued to Goa from Hanuman Mines the rest of the iron ore has either gone from the Janathakal Mines, Chitradurga or Hanuman Mines, Tumkur or from unknown source illegally. The cost of lumps US $ 2741325.54 with exemplary penalty should be recovered by following due procedure from Twenty First Century Wire Rods Ltd of Sri Vinod Goel along with other actions. The exports of fines from
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Belekeri port is separately dealt in this report. The matter of under-invoicing should be taken note by the concerned Authorities to further investigate.
11) As seen in the matter there are many illegalities and irregularities have been committed in the said lease by the lessee and his GPA holder. It justly deserves cancellation of mining lease granted on 23-08-2007 ML No. 593/933 by following due process of Law.
12) Action should be initiated against all the officers/officials involved in this matter by following the due procedure under the Law.
22) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
23) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
24) In the case of Sri H.D.Kumaraswamy, former Chief Minister of Karnataka, since he is not holding any public post under the State at present, no action is recommended.
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However, it is open for the Government to make assessment, if any loss is caused and take appropriate action against him.
25) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export. 26) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
SD/- (N.SANTOSH HEGDE) LOKAYUKTA
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17
ILLEGAL APPROVAL OF MINING LEASE IN FAVOUR OF SHREE SAI VENKATESHWARA MINIERALS
1) Sri S.V. Sakre of Maharashtra State, a PWD Contractor submitted an application on 17/4/2006, in favour of Shree Sai Venkateshwara Minerals (SSVM), giving its address as No.6, 3rd cross, Sudhamanagar, Bangalore 560 027. (This address is a fictitious address). The application was made to grant Mining Lease for an area of 550 acres in NEB Range, Sandur Taluk, Bellary District, for winning of iron ore. It is to be noted that the proposed area was a surrendered area; out of the Mining Lease granted to M/s. Chaugle and Company vide M.L. No.119/13. The area also overlaps with the proposal of M/s.VISL to an extent of 140 hectares. The application was received in the office of the Director of Mines and Geology, Bangalore on 17/4/2006, the date the application was signed. The same was registered as 376 AML 06. As per the records of the Director of Mines and Geology, there were other 29 applications for the same area for different extent of land. It could be safely presumed that Sri S.V.Sakre’s application was perhaps the last application received. In the application, the Applicant has described himself as a leading manufacturer of steel and iron rods. He also claimed at Para (4) that mining and industries as his profession. At para (2) of the application, he has stated that SSVM is a private limited company, which is subsequently contradicted by him. Now he claims that SSVM is an unregistered partnership firm, as could be seen at Annexure to Chapter-17 of Dr. U.V.Singh’s Report at pages 1 to 7.
2) The then Director of Mines and Geology in Karnataka had made a comparative statement of all the applications and submitted the same to the State Government on 14/9/2006 for processing the same under Rule 26(1) and 59(2) of the M.C.
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Rules. It is to be stated here that the said proposal is missing from file No.CI 252 MMM 2006 of the Secretary to Government (Mines). A reminder was sent to the Government to obtain approval under Rule 59(2) of the M.C. Rules from the Govt. of India. But the State Government has raised certain objections and the matter was under correspondence for a period of one year.
3) Later, the Director of Mines and Geology, after considering the objections raised by the Government, had built up a proposal and submitted to the State Government stating that there are many applications filed in this behalf and it is left to the State Government to take a decision. He also submitted the details of other 28 applications received in his office in the subject matter. Subsequently, a note from the Secretary (Sri. D.V. Prasad) of the then Hon’ble Chief Minister) was sent to the Secretary to Government, Commerce and Industries Department to submit the file of SSVM for perusal. The Note was numbered as Mu.Ma.Ka 2414/2007 dated 5/10/2007 found at Annexure to Chapter-17 of Dr.U.V.Singh’s Report at page 8.
4) Following the directions issued in the above said note, a note was put up by the case worker and then placed before the Additional Secretary on 5/10/2007 i.e. on the same day in the file which was moved to the Secretary to Government, Commerce and Industries Department. After attending the file, the Secretary (Mines) submitted the file to the Secretary to the Chief Minister on the very same day i.e. on 5/10/2007, who in turn placed the same before the Chief Minister. The Chief Minister, as per the noting at para 16, page 7, of the file which is at Annexure to Chapter-17 of Dr.U.V.Singh’s Report at page 9
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had approved the proposal. The Noting of the Chief Minister is as follows:-
“I have perused the records. The Mining Lease in respect of 550 acres of land in Jog, Thimmappagudi, Vhavihalli, NEB Range, Sandur Taluk, Bellary District is granted in favour of the following:
M/s. Sri Sai Venkateshwara Minerals” Sd/- H.D.Kumaraswamy, Chief Minister.
5) The file was then sent back to the Secretary (Mines) on 6/10/2007. This approval accorded is in violation of Rule 59 of the M.C. Rules. It is stated here that the approval in this case was given without taking necessary relaxation from the Central Government under Rule 59(2) of the M.C. Rules, which was a requirement under Rule 59(1)(a) of the M.C. Rules. The Secretary (Mines) in Paras 14 and 15 of the File No. CI 252 MMM 2006, had pointed out for taking such relaxation from the Government of India, among others. It is to be noted that the approval of such a large extent of 550 acres in forest area for mining lease to the Applicant in this case i.e. SSVM, which is an unregistered partnership firm, having no experience in mining activities and iron ore trade is arbitrary, non-transparent and in violation of Rule 59 of M.C. Rules
6) After having the approval from the then Chief Minister, a letter was written to the Director of Mines and Geology, on the very same day i.e., on 6/10/2007 to submit the proposal for onward submission to Govt. of India (Annexure to Chapter17 of Dr.U.V. Singh’s Report at page 10). In the said letter, the name of Sri Vinod Goel as proprietor of the firm of SSVM was introduced for the first time by substituting the name of Sri. S.V. Sakre,. The letter has been sent by Sri K. Jayachandra, the
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then Under Secretary to Government (Mines), Government of Karnataka. The relevant part of the letter is as follows:- lw|p x$L 3MY *{±7Y Yw rY¯]Y¤ 8wp $L t$LY¤pt ·MI{±$L$TJYz±4pH8Zwr©p8U uVq· -p¸(v J$Ip|± -3J r¯]}3 3v«W &oM89 8W8Z¤8$Lp¨w ~¯yw$3P}²JxpJ{¸µ r¯r¯¿OJ¸ ~¯ xp]¸ 8$L{¸ (wM8 w$GJ wLTz wLp® w5® w$Z¯$LwJ ']~JY¤J &]J$Y 3$]¯ 3¹J] rw¹pw]p8 3 u39]¦ ) 3 3$T ]5{Z8 wJr¯Z8 p¨3T{3 3Tu3$]Ywp¨3Jzpp q]¹~z©Q]¦p w ~¯ y w$3P}²J xpJ{¸µ r¯r¯¿OJ¸ ~¯ xp]¸ 8$L{¸ (wJ 8W8Z¤8 &I¹ 8 &]3 $t$oÅ] &sÅTxO8 =3¸|¸wY¤r¯rVw¹]|±wLZ ]Mr¯]}]=3¸t$oxwJ8 ·]UÅ3Yp3´ Ywp$t8$L 3G$L=$]¯ 3¹J]&oÅp3$L¹]~¹ 8W wWG®wY¤38M3({6m 7) As per Para 16 of the Note file in No.CI 252 MMM 2006, the name of the Proprietor Sri Vinod Goel, was not there. Also there was no such name in the original application of Sri S.V. Sakre. After going through the records of the file of the Director of Mines and Geology and Secretary to Government, (Mines), it is observed in the report of Dr. U.V. Singh that the name of Sri Vinod Goel as proprietor, had been introduced later on and it could not have happened without the connivance of the officials. Having perused these documents, I am in agreement with the observations made by Dr.U.V.Singh.
8) In compliance to the letter dated 6/10/2007 of the Under Secretary (Mines), the then Director of Mines and Geology (Sri S.K. Prabhakar), submitted a proposal vide letter No. DMG 367 AML 06/2007-08/2011 dated 8/10/2007 along with check list
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and other documents. In the check list at para (1) against the name of the Applicant, the Director has stated as M/s. Sri Sai Venkateshwara Minerals (Proprietor Sri Vinod Goel). The same has been reiterated in Para 8 of the check list. Likewise, in the proforma for recommending for grant of mining lease at Para 11 also, it is mentioned against the name of the Applicant as M/s. Sri Sai Venkateshwara Minerals (Proprietor Sri Vinod Goel). This is a deliberate attempt to favour Sri Vinod Goel and it is contrary to the original application submitted by Sri S.V. Sakre. Copy of the proposal submitted by the Director of Mines and Geology is enclosed to the report of Dr. U.V. Singh at Annexure of Chapter 17 pages 11-17. As seen from the proposal and its annexures submitted by the Director of Mines and Geology, the original application which was submitted by Sri S.V. Sakre has been replaced with another application and proposal was built up in favour of Sri Vinod Goel, as if the same was the original application. The proposal so prepared by the Director was submitted to the State Government. It is necessary at this point to state that suitable Disciplinary action is to be taken against the then Director of Mines and Geology in accordance with law for his misconduct in permitting the substitution of fresh application in place of original one.
9) On receipt of the proposal dated 8/10/2007 from the Director of Mines and Geology, a draft proposal was put up on the same day i.e., on 8.10.2007 by the Under Secretary to Government for submitting the same for approval under M&M (R&D) Act, to the Government of India. The said file contains the drat letter and in the draft letter it is written as “Not to
Issue”. But the proposal signed by the Under Secretary, State of Karnataka had been received at the Government of India, Ministry of Mines. It is a matter for investigation, whether this
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is an afterthought attempt subsequently done to cover up the matter.
10) It is to be noted here that the Government of India had sent a letter vide No. 5/20/2010-M.IV (New Delhi) dated 5/8/2010, sent by the Under Secretary to Government of India, (Sri C.K. Rawat), along with Xerox copy of the proposal of the Government of Karnataka vide No. CI 252 MMM 2006 dated 9/10/2007 sent by Sri K.Jayachandra, Under Secretary to Government (Mines), Commerce and Industries Department. This letter was received in the office of the Secretary to Government (Mines), Commerce and Industries Department. This is an indication that a signed proposal was submitted to the Govt. of India. The letter dated 9/10/2007 was signed by Sri K.Jayachandra, Under Secretary has been compared with the draft letter available in the file of the Secretary to Government (Mines) by Dr.U.V. Singh’s team and it is found that this letter is the same copy of the draft letter available in the file of the Secretary to Government, Mines. This indicates the fraud that has been played by Sri Vinod Goel and how the concerned officials colluded with Sri Vinod Goel. The copies of letters are at Annexure of Chapter-17 at ages 18 to 22.
11) A Writ Petition No. 22348/2009 was filed before the Hon’ble High Court of Karnataka by Sri Vinod Goel, to which petition, Union of India, State of Karnataka and the Director of Mines and Geology were made Respondents. The green bench of the High Court delivered a judgment on 26/8/2009. Certain observations are made in the said writ petition, which indicates that the case of the Respondents was not properly argued by the counsel representing the Respondent Government. It is also to be noted that the State Government had not even filed its
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Written objections. Thereafter, the Government Advocate, who appeared for the State by his letter dated 24/9/2009 informed the Legal Cell, Commerce and Industries Department, opining that this is not a fit case to prefer an appeal. However, recently, it is noticed a Review Petition has been filed by the State Government.
12) A perusal of the connected records and the sequence of events indicates that Sri Sai Venkateshwara Mines of Sri S.V. Sakre is an unregistered firm having its office at Maharashtra. (The Bangalore address was given as Sudhamanagar, showing its office at No.6, Sudhamanagar, Bangalore 27, as mentioned earlier). The letter written by Dr. U.V.Singh, in his office was returned undelivered, which indicates that the address given was bogus. The Application for grant of mining lease indicates that the company is a private company and there was no mention of any partnership as is being claimed now. A letter dated 12/4/2006 of SSVM, if perused, shows that Sri S.V. Sakre, representing himself as partner of SSVM. Whereas the partnership deed was signed three days later i.e. on 17/4/2006. In the partnership deed, now produced, it is claimed that Sri Rajkumar Agarwal and Somanath V. Sakare as shown as partners. But this partnership deed was annexed to the original application filed by Sri S.V. Sakre. Dr. U.V. Singh’s investigating team had written a letter dated 17/2/2011 to Sri S.V. Sakre to submit his reply on certain specific questions. In reply, Sri S.V. Sakre submitted;
(b) the firm (SSVM) was not registered because no transaction and trading has been done with this firm so far;
(c) they have not obtained VAT registration in Karnataka;
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(d) they have not obtained VAT registration in Maharashtra State also;
(e) Mr. Rajkumar Agarwal is his partner; (f) No MST and KST number obtained; (g) They have not opened any account by this firm Shree Sai Venkateshwara Minerals, because no transaction and trading has been done by this firm.
13) Sri S.V. Sakre, who claims as partner in Shree Sai Venkateshwara Minerals submits his new address as No.6, Chowdappa Road, Shantinagar, Bangalore, which also happens to Sri Rajkumar Agarwal’s address, whose name now found in the partnership deed. It is to be noted that on 14/4/2006, this firm was not in existence, because as per their own statement, the partnership was signed on 17/4/2006, the day of filing the application for mining lease before the Director of Mines and Geology. It is a matter of concern, as to how a firm which does not have VAT number, no financial transaction, no KST registration, no experience in mining and iron ore trading can be granted mining lease to an extent of 550 acres. When Sri Rajkumar Agarwal was questioned by the team of Dr. U.V. Singh, his answer was they are not in the mining business. Sri S.V. Sakre is a P.W.D. Contractor in Maharashtra. He also has no mining experience. The partnership deed of SSVM had not been enclosed while submitting the proposal application on 17/4/2006, instead in the application it has been recorded as a private company.
14) The records pertaining to registration of VAT of Sri Sai Venkateshwara Minerals, proprietor Sri Vinod Goel, has been called from the Commissioner of Commercial Taxes, Bangalore and the same was examined by the team of Dr. U.V. Singh. From the records, it is noted that the application filed by Sri
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Vinod Goel (SSVM) in the office of the Asst. Commissioner of Commercial Taxes, Local VAT office, which is dated 19/10/2007. The firm SSVM (Proprietor Sri Vinod Goel) was not in existence on 17/4/2006 the day on which Sri S.V. Sakre had filed the application. Hence, the claim of Sri Vinod Goel for filing original application for grant of mining lease before the Director of Mines and Geology on 17/4/2006 is false. The Demand Draft filed along with the application has also been verified from the respective Bank and found that it pertains to the address as stated in the Bangalore address i.e., Sri S.V. Sakre, Sudhamanagar, Bangalore. It is clear from the perusal of files of the Director of Mines and Geology and Secretary to Government (Mines) that Sri Vinod Goel has conspired with the officials of the said office to eliminate the claim of the original Applicant, i.e., Sri S.V. Sakre and substituted the same with his name, obviously for wrongful gain. Therefore, it is necessary that a Departmental Enquiry should be initiated against all the concerned officials. Sri Vinod Goel should be proceeded against by filing criminal cases for cheating, forgery and conspiracy.
15) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
16) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of
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Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
17) In the case of Sri H.D.Kumaraswamy, former Chief Minister of Karnataka, since he is not holding any public post under the State at present, no action is recommended. However, it is open for the Government to take appropriate action against him for his misconduct as stated in this chapter.
18) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
19) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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18
ILLEGAL MINING IN M.L. NO.2220 OF HANUMAN MINES IN FOREST LAND (TUMKUR DISTRICT)
Dr. U.V. Singh has traced the history of the grant of Mining Lease to Sri B.D. Hanuman Singh. He has found that the applicant had filed two applications for grant of Mining Lease before the Director of Mines and Geology, Bangalore one for over an area of 135.66 Hectares and another for over an area of 320 Acres in Karekurchi and other villages of Gubbi Taluk and Tiptur Taluks, Tumkur District.
2) It is found that Applicant has also filed an Affidavit in both the cases to the effect that he did not possess any mining lease in the State and had not applied for the same simultaneously. It is also noted that the sketch maps filed along with the applications are identical with difference in extent of land. Dr. U.V. Singh has come to the conclusion that the part grant of mining lease is in forest land bearing Sy. No.95 of Rajathadripura Reserve Forest. Further, the finding in that report is that between 1997 and 2009, 7,19,244 MTs of iron ore was excavated. The said excavation, according to Dr. U.V. Singh is in contravention of the Forest (Conservation) Act, 1980 and guidelines issued by MOEF therein. He has also found serious irregularities committed by Sri T.Thimmappa, the then Deputy Director of Mines and Geology, Tumkur.
3) Further, Dr. Singh, notes that Sri B.D. Hanuman Singh, the lessee submitted proposal for transfer of the lease to M/s. Matha Overseas Limited, but in between the lessee put up proposal for transfer of the lease to Sri Vinod Goel, Chairman, Twenty First Century Wire Rods, who was already having General Power of Attorney to operate the mining from Sri B.D. Hanuman Singh. It is noted that on the strength of GPA, Sri
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Vinod Goel has worked the mine unauthorisedly. The Mining for extraction of iron ore has been done in excess of what was permitted by Karnataka State Pollution Control Board. It is noted that the Deputy Commissioner Tumkur had also complained that the lessee was operating the mine without statutory clearance vide his letter No. IND/CR/83/2005-06 dated 14/5/2007. Despite the serious lapses, as pointed out, the then Director of Mines and Geology, has permitted the Lessee (Transferee) to carry out mining operations quoting the irrelevant provisions of M.C. Rules in his letter dated 22/11/2007.
4) On the above basis, Dr. U.V. Singh, has concluded thus;
(1) Sri Hanuman Mines ML No.2220 of an Extent of 206.40 acres comprised of Forest land; 71.20 Acres in Survey No. 95 of Rajathadripura and Revenue Land of 135.20 acres in Survey Nos. 150 and 20 of Rajathadripura and Karekurchi.
(2) The assessment made by the PCCF on 20/8/1992 to the effect that the land sought for mining lease is revenue land was not correct. A part of land sought for lease formed the part of Rajatadripura Reserve Forest.
(3) Although the Senior Geologist, Tumkur had reported in his inspection report dated 21/4/2991 that the applied area comprised partly forest land and have Eucalyptus trees, the Director of Mines and Geology, did not think it proper to bring this fact to the notice of the Principal Chief Conservator of Forests, when he
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sought the opinion of the Principal Chief Conservator of Forests.
(4) The Deputy Commissioner, Tumkur did not mention that a part of the land sought for mining lease forms the part of Rajatadripura Reserve Forest (383 Acres in Sy. No.95 is included in the said Reserve Forest ever since 1943).
(5) Before issue of notification granting mining lease in the present case, it was brought to the notice of Director of Mines and Geology by the Deputy Commissioner, Tumkur (in respect of another application seeking mining lease in the same Sy. Nos. i.e., 95 and 150 by the same Applicant dealt with in the same files) that mining activity would adversely affect the nearby temples, the hill and the devotees and recommended to reject the application. Accordingly, the application came to be rejected. But the Director of Mines and Geology did not bring this fact to the notice of the Government to reject the application in the instant case. Thus by filing two applications, the Applicant succeeded in securing the lease on the basis of other application. Action taken cannot be suggested since the period is beyond the terms and reference of this investigation.
(6) As per the Joint survey an area of 5.38 acres have been encroached in the form of mining in Forest Land. The Hon’ble Supreme Court in Writ Petition (Civil) No.562/2009 dated 14/4/2011
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has directed the Central Empowered Committee for survey of 99 mines in Bellary District and if encroachment is found the mining activities should be stopped. The same yardsticks should be applied for this case also.
(7) An assessment of the iron ore extracted from the forest land (other than revenue land) should be made and 5 times of market value should be recovered with exemplary penalty from the lessee along with the other environmental damages. (8) The lessee succeeded in securing temporary injunction order restraining the Forest Department from interfering with mining operation and transportation of ore through the road passing throughout the Reserve Forest from the Court of Hon’ble JMFC on 31/10/2007 and 5/11/2007 in O.S. No.124/2007 and 125/2007. This order continued to operate till the Hon’ble High Court passed order on 6/8/2009 in Writ petition No. 12028/2008 (by hearing the Writ Petition along with the original suits), where the Hon’ble High Court had declared that the impugned land is not available for mining activity as it is forest land, unless a clearance is obtained U/s. 2 of the Forest (Conservation) Act, 1980.
(9) The fact that a part of leased area is forest land approval of the Central Government under Forest (Conservation) Act, 1980 is mandatory. No mining should be allowed even in the revenue land till the approval is obtained. After the fact
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came to the notice of the Director Mines and Geology that the part of the leased area is forest land, the issuance of mineral dispatch permits by the Deputy Director of Mines and Geology to the lessee is unlawful and hence, Disciplinary action should be initiated against him.
(10) The environment impact assessment notification dated 27/1/1994 which has been replaced with the Notification dated 14/9/2006 stipulates obtaining prior approval of the Central Government in the Department of Environment and Forests to undertake any new project or explanation/ modernization of the existing industries. Mining is one among the industries identified for this purpose. Similarly, consent of Karnataka State Pollution Control Board is a must for establishment of any industry or enhancement of production capacity. The production capacity of iron ore approved in the instant case by both these authorities viz., Ministry of Environment and Forests and Karnataka State Pollution Control Board is only 7000 and 7300 MT per annum respectively. But in gross violation of these statutory stipulations, the lessee has produced 8,100, 17,345, 1,49,120 and 2,17,754 MT of iron ore during the years 1998-99, 2003-04, 2006-07 and 2007-08 respectively without ensuring the environmental safeguards. Thus, lessee had violated the provisions of Environment impact assessment notification dated 27/1/1994 as modified in
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Notification No. S.O. 1533 (E) dated 14/9/2006 and Sec. 21 of Air (Prevention and Control of Pollution) Act, 1981. Action should be taken against the Environmental officer, Tumkur for allowing the Mining without adhering the permitted quantity.
(11) By furnishing the false information to the Ministry of Environment and Forests, to the effect that the entire leased area is Revenue Land, the lessee has misguided the Central Government, although the lessee was well aware of the facts that 71 acres 20 guntas is forest land. Based on the wrong assumption he has succeeded in obtaining clearance for enhanced production of iron ore from 7300 MT/PA to 4,37,000 MT/PA. Appropriate proposal to the Central Government should be submitted to take necessary action.
(12) When the fact of non-obtaining the statutory clearances from Ministry of Environment and Forest and Karnataka State Pollution Control Board came to the knowledge of the Director of Mines and Geology, the lessee was permitted to carry on mining activity quoting Rule 24 A(6) of M.C. Rules in contrary to its applicability in the matter. This should be further investigated.
(13) It is to state here that Sri Vinod Goel who is the proprietor of this mine is also involved in the fraudulent activities in another mine M/s. Janthakal Enterprises, Chitradurga and Sri Sai Venkateshwara Minerals, Bellary.
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5) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
6) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
7) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
8) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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19
ILLEGAL MINING LEASES GRANTED OR IN PROCESS OF GRANT IN RAMGAD BLOCK AND OTHERS IN SANDUR TALUK CONSIDERING THE LEASE AREA AS NON-FOREST LAND OUT OF FOREST ------
1) The Forest (Conservation) Act 1980 herein after read as Act has been brought in by the Union Government of India on 25th October 1980 and amended in 1988 for the conservation of forest and connected ancillary matters. As per Section 2 of the said Act, no non-forest activity shall be taken without prior approval of the Central Government in all the forest areas. The Hon’ble Supreme Court of India while hearing a matter in W.P.202/1995 of Sri. T.N. Godavaraman Thirumalpad Vs Union of India and others has issued an order dated 12.12.1996 in this subject matter. In the said order the Hon’ble Supreme Court has defined the “Forest” to be applicable under this Act. The definition given by the Hon’ble Supreme Court in the said order for the “Forest” is as under:
“The Forest conservation Act, 1980 was enacted with a view to check further deforestation which ultimately results in ecological imbalance; and therefore, the provisions made therein for the conservation of forests and for matters connected therewith, must apply to all forests irrespective of the nature of ownership or classification thereof. The word “Forest” must be understood according to its dictionary meaning. This description covers all statutorily recognized forest, whether designated as reserved, protected or otherwise for the purpose of Section (i) of the Forest (Conservation) Act. The term ‘Forest land’, occurring in Section 2, will not only include “forest”, as understood in the dictionary sense, but also any areas recorded as forest in the Government record irrespective of the ownership. This is how it has to be understood for the purpose of Section 2 of the Act. The provisions enacted in the Forest (Conservation) Act, 1980 for the conservation of forests and the matters connected therewith must
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apply clearly to all forests so understood irrespective of the ownership or classification thereof. This aspect has been made abundantly clear in the decisions of this Court in Ambica Quarry Works and Ors. V/s State of Gujarat and Ors, [1987 (1) SCC 213], Rural Litigation and Entitlement Kendra V/s State of U.P. [1989 Suppl. (1)SCC 504], and recently in the order dated 29th November 1996 in W.P. c No.749/95 (Supreme Court Monitoring Committee V/s Mussorie Dehradun Development Authority and Ors.). The earlier decision of this Court in State of Bihar V/s Banshi Ram Modi and Ors [1985 (3) SCC 643] has, therefore, to be understood in the light of these subsequent decisions. We consider it necessary to reiterate this settled position emerging from the decisions of this Court to dispel the doubt, if any, in the perception of any State Government or authority. This has become necessary also because of the stand taken on behalf of the State of Rajasthan, even at this late stage, relating to permissions granted for mining in such area which is clearly contrary to the decisions of this Court. It is reasonable to assume that any State Government which has failed to appreciate the correct position in law so far, will forthwith correct instance and take the necessary remedial measures without any further delay”.
2) Subsequently the Government of India framed the guidelines under the Act for application of Section 2 of the Act as Annexure. The content of the said annexure is reproduced herein:
“……. The term ‘forest land’ occurring in Section 2, will not only include ‘forest’ as understood in the dictionary sense, but also any area recorded as forest in the Government record irrespective of its ownership. This is how it has to be understood for the purpose of Section 2 of Act. The provisions enacted in the Forest Conservation Act, 1980 for the conservation of forests, and the matters connected therewith must apply clearly to all forests so understood irrespective of the ownership or classification thereof…..”.
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3) By going through the definition of the forest defined by the Hon’ble Supreme Court and followed by the Government of India in its guidelines, the forest has to be understood and applied irrespective of its ownership. The Government lands and also non cultivated private lands in Sandur and Hospet Taluks are by and large covered under the said definition. In Sandur Taluk some of the blocks wherein the mining leases are either notified & granted or in the process of notification to grant under MMDR Act 1957 without having approval under the Forest (Conservation) Act have come to light during the investigation. On going through the records, the Mines Department don’t even have an intention to do so or to insist to take approval of such leases/applications under the Forest (Conservation) Act 1980 simply because of reason that in these cases the Mines Department have got “No objection Certificate” issued by the officials of the Forest Department / Revenue Department that the land proposed for the mining lease grant is not a forest land. The officials of the Mines Department have not taken pain to verify the status of land knowing fully that there is an order in W.P.202/95 of Hon’ble Supreme Court for prohibition of non- forestry activities in Forest Land. Even the officials of Revenue Department knowing fully that the land in Sandur region is fully covered with forest trees and lands are in the category of deemed forest, have not bothered to verify the status of the land and went ahead to recommend the lease cases taking into consideration that the land is a non-forest land to Mines Department to process the files to issue notification under the MMDR Act. The forest department to whom the responsibility is given to protect the forest, its officials at the level of Deputy Conservator of Forests, Assistant Conservator of Forests and Range Forest Officers have issued no objection certificate based on the revenue records. They have “forgotten” to verify the forest
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records based on which the no objection certificate should have been issued. The forest officials had totally failed to comply with the orders of Hon’ble Supreme Court dated 12.12.1996. In fact there is no provision under the Karnataka Forest Act 1963 to issue such “no objection certificates” and also no Government Order or direction to do so by the forest officials. Some of the leases granted under this category are in operation of mining. The details of the areas wherein the status of the land is forest as per the Order of Hon’ble Supreme Court (leases have been either granted under MMDR Act or they are in the process of grant) along with names of the applicants/lessees are given as under:-
1. Ramgad Block, Sandur Taluk.
Sl. No. Name of the Lessee /Applicant 1 M/s Adarsha Enterprises 2 M/s Sparkline Mining Corporation 3 Mr. J.M. Vrushabendraiah 4 M/s Jai Santhoshi Matha Mining Enterprises 5 M/s D. Ramesh Iron Mines 6 M/s Shivavilas Trust 7 Mr. J.M. Vrushabendraiah 8 Mr. Ram Rao M Poral 9 M/s V.S.L. Mining Company (Stock yard) 10 K.S.L.Swamy, Tornagallu 11 K. Kumarswamy 12 M. Mabusab S/o Fakruddin Sab, Thyagadal, Sandur 13 Others
2. Karthikeshwara Village, Sandur Taluk
Sl. No. Name of the Lessee /Applicant 1 M/s Karthikeyan Manganese and Iron Ore Private Limited 2 Mr. A. Arogyadas & Mr. G. Praveen Kumar Nikam 3 Mr. G.Praveen Kumar Nikam & Mr. B. Rudra Gowda, Sandur. 4 Mr. B. Rudra Gowda, Sandur. 5 M/s Mitra Minerals Enterprises, Sandur. 6 Mr. A. Arogyadas, Bellary.
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3. Muraripur Village, Sandur Taluk
Sl. No. Name of the Lessee /Applicant 1 M/s Balaji Mines Minerals Private Limited
4) In continuation to the First Report wherein it has been stated that the said area is falling in the category of forest under the definition given by the Hon'ble Supreme Court in writ petition 202/95 order dated: 12.12.1996. In furtherance to the said definition it is stated here that the Sandur Forest Act 1943 was in force in the present Sandur taluk ruled by Shrimant Sarkar Maharaj Yeshwant Rao Hindu Rao Ghorpade, Mamalkatmadar Senapathi. As per Section 2 (11) of the said Act the State Forest had been defined as: “(11) “State Forest” includes all land at the disposal of Sarkar not included within the limits of any Village Forest nor assigned under Huzur sanction for any public or communal purpose. Provided that it shall be competent for Sarkar to modify or set aside such assignment and constitute any such land a State or Village Forest, or devote the same to any other purpose they may deem fit.”
5) As per Section 11(3) of the said Act the District Forest or State Forest defined in Mysore Forest Act is also the State Forest. The same is reproduced as: (iii) In Mysore Forest Act wherever the words “District Forest or State Forest” occur read them as “State Forest.”
6) With these provisions the area in question in Ramgad block has been shown rightly as Reserve Forest in the topo-sheet prepared by Survey of India of Union Government.
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7) The Maharaja of Sandur Sri Y.R. Ghorpade had transferred this forest land (4051.40 Acres) vide his letter dated 24-09-1973 addressed to Sri Devaraj Urs to the then Chief Minister of Karnataka and the possession has been taken by the State Government on 27-09-1980. This includes an area of 2395.40 Acres in RM Block in Ramghad area. The Maharaja of Sandur has not stated any claim of any person during the handing over. That makes the things amply clear that there was no right of any institution or individual in this land during handing over. Further the area was surveyed during 1980 and there was no any survey number and claim during the survey. As per the definition provided in Section 2 (11) of the Sandur Forest Act 1943 all the areas remains as State Forest and now it is being called as Reserve Forest under the Karnataka Forest Act 1963.
8) It has been brought to the notice of this office that certain rights have been created in this block with connivance of the officials of Revenue Department. New alleged survey numbers from survey number 5 to 35 have been created and rights in form of land grants have been illegally given. On perusal of the list and the present claimants of ownership of land it is found that most of them are not the residents of alleged Ramgad village. They even do not fulfill the criteria of land grants. In fact there is no notified revenue village by name Ramgarh village. It has been stated as Ramandurg in the village map of 1903. The forged documents in the form of grants certificates have been created and the land has changed many hands. It is pertinent to state here that the land of this Ramgad block is nonagricultural land and having very high quality of iron ore deposits.
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9) It is learnt that the so called Ramgad village is not a notified Revenue village as stated above. The forest land now in question of Ramgad block is actually not a part of the survey no. 1-4 which is very often stated as Ramgad village survey numbers. This land, before handing over from the then Maharaja of Sandur and after handing over is not a part of “Ramgad village”. In such circumstances the question of settlement of the additional forest land does not arise.
10) The Hon'ble Minister for Revenue has ordered in File
No 3$(uV] at para 108 of the note sheet. The note approved by the Hon'ble Minister is reproduced as under: l3TY rM~|] ) 3TYwp¨ Jw:T]|±Jw w®$Lp¨ t8Mz *]¦~ t ·M I{±o3M8 ]5{8 $ZJw xwJ '3¯w 'J¸Q '9Jw xwJ (Y®o xwJ qU 3¹J3 rY¯ tJoJw]p¨8wq{9]3TY]3$U3J|±JwxwJ8 p¨ 3$]$L ({6$L w®wJX8 wLZ Z$L]wJ tJ]$Z] w¹O±w$P¸'8ww]z-z±z±u±3¸8]¦p$YJ&w8 w9¹3JWwp¨ wLU w¹p$tJ¸8 p¨ qU 3$]$L ({6$L uVwLrp wY¤ uV]5{8 }6 wLTY¤])8 &w8 (z±oJw8 $LLw] &oÅ3Y pQsÅ3}p¸ 8 uVw$GJZ8 ']}8z±]8 $LLw] Gxpp¨ &JW® ({6$L Gxp -$] rM8W{8woz± &JW® ({68 w$GJ8u3 (z±w pQrV '8u3 'Yp3 69 Gxp JYrU *] -{± Gxp8 3$]$L ({68 M] Gxp8 8Y¤] ) p¨{$L|± $TJ Yz±4p Jw:T 8¯w] rW¹ w¹ O±w$P¸ Z$8 8 wLU ) r¯]}3 $t$]VrO -z±Jz± (Jw ]5{Z8 p¨ rM~| wJo qTz uVwLrp wY¤ uV]5{8 '$L3¤M8q]¹}pqTz']~]m I3JX3JJU¡ 3$]$LDwJ 11) On perusal of the village map by name Ramandurg, Sandur taluk, Bellary district of the year of 1903, there are only 4 survey numbers. There is no any other land included in this
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survey settled village map. Now the forest land in question is not a part of these survey numbers and cannot be included for any grant. There is no Government Order wherein the additional forest land is included in this village map. With these facts and circumstances whether the direction issued by the Hon'ble Minister is legally according to Law or otherwise should be further examined.
12) It is stated here that the Forest Settlement Officer Bellary in this matter has issued an order no. FAF/FSO/RES/CR- 9(A)/86-87 dated 24-05-2010 by excluding an area of 265 Acres from the Section 4 Notification issued under the Karnataka Forest Act as claimed by the Forest department. The exclusion of 265 Acres from the forest land as enclosure is bad in Law and deserved to be set aside. It is even against the observations made by the Hon'ble Minister in the para 108. The Notification issued by FSO dated 24-05-2010 for creation of an enclosure is against the provisions of the Karnataka Forest Act 1963 for the following reasons.
(1) The area in question was covered under the then Sandur Forest Act 1943 and now under the Karnataka Forest Act 1963 cannot be considered as non-forest land in any circumstances. If any rights of ownership with forged documents or with connivance is created it should be undone by following provisions of Law.
(2) The Assistant Commissioner himself is a jurisdictional officer for deciding the land matters. He cannot sit on his own judgment to decide the forest settlement. The settlement officer should be an officer having no jurisdiction under the Karnataka Land Revenue Act for this purpose of
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Forest Settlement. The Deputy Commissioner of the district may be appointed as Forest Settlement Officer. (3) The procedure is not followed under the Karnataka Forest Act 1963 and it is done in haste to extend benefits to certain iron ore mining leases already granted or in the process of grant.
(4) Most of the claimants of right of ownership or title are not the residents of the then Ramandurg. Hence their claim cannot be considered. Most of them did not fall in eligibility criteria.
(5) It has been observed during the investigation that most of the documents claiming rights of ownership title are forged and concocted.
13. There are certain claims made over in this forest land. One of such example is in the alleged survey number 17 & 18 of the said village. In this case Good Shepherd Bellary claiming ownership of an area of 14.59 Acres based on the payments made to the then ruler of Sandur. On perusal of records submitted by them it is found that there is no title confirmed on them at any point of time for the claimed land. They have been treated as “tenants”. The then Ruler of Sandur did not mention anything about the rights either on the garden land or bungalow while handing over forest land to the State Government. The land in question is forest under the Karnataka Forest Act 1963 by virtue of land defined under the Sandur Forest Act 1943.
14) For the said land (sy. no. 17 & 18); a false sale deed had been created in favour of Sri Jaganath S/o Yerappa, Coal bazaar, Bellary vide sale deed no. 850/08-09 dated 14-10-2008 for Rs. 10,00,000.00. There was no any criminal case filed in
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such fraudulent sale deed against the seller and purchaser. An appeal has been filed on 05-08-2009 by Sister Rosliy (Sister Superior of the Good Shepherd Convent Bellary) before the Assistant Commissioner to cancel mutation order no. MR/1/09- 10 dated 13-07-2009 of Revenue Inspector. The Assistant Commissioner has heard the matter and passed an order on 14- 08-2009 in a span of 9 days only. This order looks to be issued to confirm the ownership land title in favour of Good Shepherd Convent, Bellary. Does it a managed show for confirmation of title of the land? It is to state that the same land has been again sold on 27-08-2009 to one Sri Keshri Prasad Yadav, Village Barwah, District Faizabad, UP by Sister Rosliy, Good Shepherd Convent, Bellary. It is further stated that the land in question is a forest land and there is no survey numbers for this land as per the various records and documents available in hand. There is no sketch and defined boundary for the said land. Without having proper schedule of land how it can be sold for a particular location. Hence the sale deed dated 27-08-2009 is under the clouds of suspicion. This entire matter requires further investigation regarding grabbing of forest land which is purposed to be granted for iron ore mining lease. It is learnt that a Writ Petition is pending before the Hon'ble High Court in this matter. Further Sri D. Pullaia has submitted a complaint to this office stating that illegal mining had been carried out forcibly in this location and in-spite of his several complaints and request to concerned Authorities no action had been taken. He also submits that he had been meted out hardship by many peoples.
15) Subsequent to the first report instead of taking action the State Government has submitted more proposals for grant of mining lease in favour of certain persons treating the forest land as patta land. The cases are detailed below.
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(1) Proposal for grant of mining lease to M/s Sushma Singhvi in alleged survey no. 12 of Ramgad village area. A report of Deputy Commissioner, Bellary have been called for and a part of the letter dated 08.04.2011 is reproduced as under:
“Sy. No. 12 of Ramghad Village is a Government land measuring totally 9.72 acres as per present R.T.C. the genuineness of which is yet to be decided after completion of the survey and settlement recommended by the Deputy Commissioner U/S 106 of K.L.R. Act. On the report of the Tahsildar Sandur No/Bhoomi/266/06-07 dated: 31-7-2007 and on review of the above regularization files, it is revealed on prima facie that the regularization was not in accordance with the rules. Hence a suo-moto review of Khathas created on the basis of the above regularization orders has been taken up U/S 136 (3) of the Karnataka Land Revenue Act and the case was last posted for submission of written arguments on 6-4-2011. Since court sitting could not taken place on the said date, the case is posted for further hearing on 20-4-2011. However the matter will be heard and disposed off as expeditiously as possible and a copy of the final orders will be submitted immediately after the disposal of the case.” ………………………….
The records in this case matter are seems to be forged.
(2) Grant of mining lease for iron ore in favour of Sri Ram Rao M. Poal over an area of 70.00 acres.
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Sri Ram Rao M. Poal has filed mining lease application on 09-01-1997 (06 AML 97) for winning iron ore over an area of 70.00 acres in RM block, Ramgad range, Sandur taluk, Bellay district. The area so applied was falling within the reserved area. For getting relaxation under Rule 59 (1) of MCR 1960 a proposal was submitted to the Government of India vide letter dated: 11- 01-2002. The Government of India returned back the proposal stating that the area should be notified under Rule 59 of MCR 1960. The proposal was returned back in original.
Subsequent to this the notifications dated: 17-02-2003 and 15-03-2003 have been issued including the area in question (block 13/1). Sri Ram Roa M. Poal has filed again an application dated: 16-04-2003 among others as per the record.
A proposal had been built up by opening a new file no.CI 179 MMM 2007 delinking with the original file no.CI 104 MMM 2001. No reason is stated for the delinking of the files. The proposal was built up under Rule 11 (2) of MCR 1960 (preferential rights for the grant of licence). The proposal was approved by the then Hon'ble Chief Minister and a direction was issued to submit the proposal to the Director, Mines. In turn a proposal was submitted by Sri K.S. Prabhakar the then Director, Mines and Geology on 27-09-2007 along with the check list and performa for recommendation. Based on this proposal the C & I Department, State Government has submitted proposal to Government of India vide letter dated 27- 09-2007 stating that the land in question is a Revenue land and there is neither stay nor a Writ Petition pending over this area. This information was factually incorrect as pointed out by the Government of India in its letter dated: 17-12-2008. As per
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Government of India letter there was a stay in Writ Petition No. 39138-39142/2002 filed by M/s Sesa Goa Ltd V/s the Union of India and others in the High Court of Karnataka at Bangalore and this case relates to the same area applied for by Sri Ram Rao M. Poal. No action taken in this regard. As per the report of CEC this proposal was not as per the norms under the Mines Rules. It is further stated that the notification dated 15-03-2003 has been withdrawn by another notification dated 27-03- 2008. The State Government has issued grant of mining lease notification on 18-07-2009 much after the notification dated 27/3/2008.
It is further stated that the State Government has issued a notification for granting mining lease in favour of Sri Ram Roa M. Poal against the first report of the Hon'ble Lokayukta to State Government and also against the letter of Deputy Commissioner, Bellary. Further the Notification issued vide dated 15-03-2003 has been withdrawn by a Notification dated 27-03-2008. Hence the notification issued for grant of mining lease in favour of Sri Ram Rao M. Poal requires reexamination.
It is to state here that the area in question is a Forest Land as per the order dated 12-12-1996 in Writ Petition 202/95 of the Hon'ble Supreme Court of India. It is also relevant to state here that the then Maharaja of Sandur has handed over this land as forest land to State Government. There are four survey numbers (1-4) as per the Akarband. The remaining land does not find place in this Akarband. All the land other than the land in survey number (1-4) was with the Maharaja of Sandur and subsequently handed over the State Government. The forest land is also covered under the Sandur Forest Act 1943. Hence, this forest land cannot be a part of the so called Ramgad village.
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No settlement can be done for a land outside the preview of a village.
It is also learnt that an agreement has been executed by the then Director, Mines and the lessee for mine operation. This is in violation of Supreme Court Order dated: 12-12-1996 and the Forest (Conservation) Act 1980. The matter is seized with the Hon'ble Supreme Court of India and at present the mining operations are closed on the recommendation of Central Empowered Committee, New Delhi. It is to note here that there are violations in this matter at various stages and all the officials including Director, Mines, Deputy Commissioner, Bellay (who has issued No Objection Certificate for Forest land) who are responsible for grant and execution of this mining lease, disciplinary actions should be initiated by following due course of Law for their misconduct and others.
(3) The three proposals submitted by State Government in favour of Sri K.S.L.Swamy, Sri K. Kumarswamy, and Sri Mabusab are against the first report sent by the undersigned and also the letter dated 03-06-2008 of Deputy Commissioner, Bellary. The details are given as under: Table-1: Proposal details of Sri KSL Swamy, K. Kumarswamy, and M. Mabusab
Sl Name of Applie Status Extent for Status Status of Proposa No Applicant d for of land which DC of land land for l extent shown is given as which submitt (Acres) in the consent processe Director, ed to applicat d in Mines GOI ion 2001 recomme Date nded proposal 1 2 3 4 5 6 7 8 1 K.S.L.Swamy, 10.00 Govern No consent Revenue Patta 16.06.09 Tornagallu ment given land land (Revenu e) Land 2 K. Kumar 10.00 Patta Consent Revenue Patta 15.06.09
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swamy land given land land 3 M. Mabusab 10.00 Patta 5 acres for Revenue Private 15.06.09 S/o land patta land land land Fakruddin and sab, remaining Thyagadal, 5 acre for Sandur Governme nt land
a) Recommendation of iron ore mining lease in Ramgad block (RM block) in favour of K.S.L.Swamy. (Annexure 1 of Chapter-19 of Dr.U.V. Singh). An application (form 1) for mining lease was submitted by Sri K.S.L.Swamy S/o Sare Lingappa, Torangallu, Sandur Taluk, Bellary District for 10 acres in alleged survey no. 28 of Ramgad village (it is to state that there is no survey number 28 in Ramgad village). As per para IX, X and XI of the application the area has been stated as Revenue land, Government. The application is claimed to be submitted on 28-08-2001 there is an over writing for the date. The application is registered as 168 AML 2001 in the office of the Director, Mines. When this application was processed in 2001, as per para 4 and para 5 of the file of Director, Mines, the area in question was overlapping with the area of 13 other applications.
There is a No Objection Certificate issued from the office of Deputy Commissioner, Bellary dated: 23-01-2001 addressed to Director, Mines, Bangalore enclosed in the file of Director of Mines. This NOC pertains to K. Kumarswamy who is another applicant in the same survey number and his case has also been recommended for grant of mining lease. As per para 1 of this NOC, 5 acre land of Dadakalandar consent is given in favour of Sri K. Kumarswamy. There is no mention of Sri K.S.L Swamy in this No Objection Certificate of Deputy Commissioner. On perusal of the records of the file of Director, Mines and Secretary, C&I it is to state that there is no No Objection
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Certificate had been issued for granting mining lease in favour of Sri K.S.L. Swamy by Deputy Commissioner Bellary.
In one of the letter of Sri K.S.L.Swamy dated: 06-06-2008 he states that in his applied area, 5 acre is his own land and the remaining 5 acres is Government Parampoke. He encloses a RTC and mutation copy. On perusal of the RTC as per column 10 the land is granted by no. M.NO.2/2000-2001 21.11.2000 by Tahsildar, Sandur Order No. ADS 111/1990-1991 dated 21.11.1991. If this record is taken as a genuine record then it is fails to understand that why he has filed an application (para 9, 10 and 11) stating the status of land as Government Revenue Land. All the records are seem to be forged. Further there is another application in the same file wherein the status is shown as “Patta land”. It seems this application is added in the file subsequently.
Further Sri K.S.L.Swamy writes another letter dated: 10- 07-2008 enclosing a consent letter of one Mrs H. Ratnamma for 5 acres and it states that remaining 5 acres belongs to him. Both are contradictory and submitted in a span of one month.
On going through these all records it is observed that a conspiracy has been hatched to get grant a mining lease by creating forged documents.
The then Director, Mines Sri M.E. Shivalinga Murthy has submitted the proposal as patta land without verifying the facts of the land in question.
The proposal submitted by Director, Mines to the C&I department, State Government in favour of Sri K.S.L.Swamy, (MLC) has been processed. As per para 9 of a note sheet it is
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stated that Deputy Commissioner has given the No Objection Certificate as per page 4 of the file. On perusal of this No Objection Certificate it is to state this NOC is issued in favour of Sri K. Kumaraswamy who is another applicant and his case is also recommended along with this case to Government of India. There is no No Objection Certificate issued in this case by Deputy Commissioner. It is to state that to make fit in the new Mining Policy 2008 of State Government, a letter has been obtained from Tata Steel, Jamshedpur which is quite unjustified. It is to state that to take such certificate from Tata Steel one Sri Hemanth Sanghvi is involved.
In continuation to the above paras pertaining to this proposal, the file No. DMG:MLS:168 AML 2001:09-10 of the Director, Mines and Geology, Bangalore has been examined with respect to recommendation of grant of mining lease in favour of Sri K S L Swamy S/o Sore Lingappa to an extent of 10 Acres in alleged Sy.No.28 of Ramgad Block. It is stated here that an application for grant of mining lease in alleged Sy. No. 28 Ramgad village, Sandur taluk has been submitted on 28-08- 2001 (there is overwriting in the date). There are two applications in the file one is from page no. 1-12 and the other is from page no. 13-23. Both the applications have been examined. In the first application page no. 1-12 the status of the land at para 9 (page 10) has been stated as Revenue land Government. In the second application at the same para 9 (page 20) it is stated as Patta land. Further at page 27 of the file Sri KSL Swamy writes to Commissioner, Mines and Geology department on 06-06-2008 stating that out of the 10 Acres 5 Acre is in my own name and the remaining 5 acre is Government Parmboku (Government waste land). In the said file at page no. 28 a No Objection Certificate (NOC) dated 23-01-
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2001 issued from the Office of Deputy Commissioner, Bellary is enclosed. This NOC pertains to one Sri K. Kumarswamy and not pertaining to Sri K S L Swamy. There is no any other NOC available in the file. Further there is another letter available in file addressed to Commissioner, Mines and Geology, Bangalore of Sri K S L Swamy (page 31) dated 10-07-2008 stating that for the purposed area 5 acre is his own land and the remaining 5 acre belongs to Mrs. H. Ratanamma and he has taken the consent of her. Further a letter dated 19-11-2008 of the Deputy Director, Mines enclosing an inspection report signed by Geologist Sri Ramlingaya is also available in the file at pages 34- 37 in the said inspection report it is stated as patta land. It is further observed at page 29 of the file there is Xerox copy of Sagavali chitty in favour of Mrs. H. Ratanamma. This may be forged.
It is stated here that the proposal has been processed on dated 04-09-2001 stating that the land is Revenue land. Further at para 9 of the note sheet of the said file it is stated that letter should be written to the Deputy Commissioner, Bellary and Deputy Director, Mines, Bellary for getting the status of the land. There is no letter written to the Deputy Commissioner, Bellary as seen in the file. A letter was written dated 17-11-2008 to the Deputy Director, Mines. The Deputy Director, Mines, Hospet replied vide letter dated 19-11-2008 stating that the land in question is a patta land. He is not a Competent authority to issue land status report. It is pertinent to note here that there is no report of the Deputy Commissioner for this land (10 acres). It is to state here that the Deputy Commissioner, Bellary vide letter dated 23 06 08 written to the Commissioner and Director Mines stating that all the survey numbers from 5-35 are
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fictitious and no proposal of mining leases should be processed. There is no mention of this letter in the file of Director.
A proposal was submitted by the Director, Mines Sri M.E. Shivalingamurthy to State Government vide letter dated 30/12/2008 with a recommendation stating the status of land as private land. The State Government in turn has submitted a proposal to Government of India vide letter dated 12-06-2009 stating that status of land as patta land for grant of mining lease in 10 acres in Ramgad village for 20 years in favour of Sri K S L Swamy.
On going through the files of Director, Mines and Secretary, Mines it is observed that;
1. There is no NOC obtained from the Deputy Commissioner, Bellary in this case. 2. The original application has been modified. In the modified application the status of the land has been changed from Government land to patta land.
3. The application has been processed in the file of DMG in 2001 as Revenue land.
4. The Deputy Director, Mines, Hospet has submitted false status report.
5. The request of the Deputy Commissioner, Bellary vide his letter dated 03/06/2008 has been ignored and the proposal is submitted to Government of India after duly approved by the Hon'ble Chief Minister.
6. The notification dated 15-03-2003 for Block 31/1 of Ramgad has been withdrawn by a Notification dated
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27/3/2008. The Notification dated 27/3/2008 has also been withdrawn dated 19/3/2011. The second notification (27/3/2008) was issued to favour to submit such proposals.
7. The records are manipulated to show undue favour to KSL Swamy.
b. Proposal of Sri. M.Mabusab (Annexure 2 of Chapter-19)
An application dated 28-08-2001 has been submitted by Sri. M. Mabusab for grant of mining lease in 10 acres in survey no. 28 of Ramgad block. The date of the application is over written. It is pertinent to note here that the dates in all the three applications i.e., Sri. K.S.L. Swamy, Sri. M.Mabusab and Sri K.Kumaraswamy are having corrections and over written and of the same style. Perhaps all the dates are subsequently written by one person. It is also doubted that the status of land contents of all the applications are modified by inserting new papers. The Deputy Commissioner, Bellary has given no objection certificate for 10 acres vide his letter dated 23-01- 2001. In this letter he has stated that one Sri. Kareemsab has given consent letter to the applicant for 5 acres. The remaining 5 acres is government land. (Page 23 of the file). The Deputy Director Mines, Hospet vide his letter dated 19-11-2008 (Page 29 of the file of director) has given inspection report stating the land as patta land for all 10 Acers. It is contrary of the NOC issued by Deputy Commissioner. This is factually incorrect. Since, there is no record of 5 acres land as patta land. The entire process of this proposal is misleading and mischievous.
It is stated here that on 06-09-2001 the proposal was processed stating the status of land as Revenue land in the file
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of Director, Mines. If this is the matter of fact then, the application submitted by the applicant pages 1 to 13 is modified subsequently. Further the notification dated 15-03-2003 has been withdrawn vide Government Notification dated 27-03- 2008. This notification is subsequently withdrawn by notification dated 19-03-2011. The Director Mines has submitted proposal vide his letter dated 30-12-2008 stating the land as patta land.
On receipt of the proposal of the Director the proposal has been processed in the Government in the file CI 32-MML-2009, in the said file there is a mention of letter dtd. 03-06-2008 of the Deputy Commissioner that, no proposal of the mining lease to be processed in Ramgad block, this has been ignored. The proposal has been processed as patta land and submitted to Government of India vide letter dtd. 12-06-2009.
On going through the files of Director, Mines and Secretary, Mines it is observed that;
1. The Deputy Commissioner, Bellary has submitted the No Objection Certificate vide his letter dated 23-01-2001 stating 5 acre as patta land and remaining 5 acres Government land. 2. The date in the application submitted by the Applicant is over written. The dates in all the three applications are over written by the same person.
3. The application has been processed in the file of DMG in 2001 dtd. 06-09-2001 as Revenue land.
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4. The proposal is submitted as patta land contrary to facts that 5 acre land is Government Land (if we take it the other patta land is genuine).
5. The Deputy Director, Mines, Hospet has submitted false status report stating all 10 acres as patta land.
6. The request of the Deputy Commissioner, Bellary of his vide letter dated 03-06-2008 stating that no proposals should be processed for grant of mining lease. This has been ignored and the proposal is submitted to Government of India after approval by the Hon'ble Chief Minister.
7. The notification dated 15-03-2003 for Block 31/1 of Ramghad has been withdrawn by a Notification dtd.27-03- 2008. The notification dated 27-03-2008 has also been withdrawn dated 19-03-2011
8. The records are manipulated to show undue favour to Sri. M.Mabusab. c. Proposal of Sri K.Kumaraswamy (Annexure 3 of Chapter-19)
An application for grant of mining lease in alleged survey no. 28 of Ramgad block has been submitted by Sri. K.Kumara- swamy stating the status of the land as patta land (Page 1 to 14). The date of submission of application is overwritten. As per the notification dated 27-03-2008, the land in “survey no. 28” to an extent of 82.00 acres has been mentioned. There is no mention of patta land in the said notification. Further there is no any other document than the No Objection Certificate of the Deputy Commissioner which can satisfy the claim of the petitioner as his own land. It is further stated that, the No
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objection Certificate of the Deputy Commissioner, Bellary is quite confusing. He has not stated anything regarding the owner ship of this 10 acre patta land. It is simply stated as: 1p$
J|±-3JrPGxp.
The proposal was initiated stating the land as Revenue land on 06-09-2001. But subsequently the Director Mines has processed the proposal stating the land as patta land. The letter dated 03-06-2008 of the Deputy Commissioner, wherein he has requested the director, mines not to process any mining lease proposal in Ramgad Block has been overlooked. The Director, Mines has submitted the proposal to the Government vide his letter dtd. 15-01-2009 stating the land as patta land contrary to the facts.
After receipt of the proposal in the State Government it was processed in the file No C1-40-MMM-2009 of Secretary Mines. As per para 3 of the said file it has been mentioned that, the Deputy Commissioner, Bellary vide his letter dtd. 03-06- 2008 has requested not to process any proposal in the Ramgad block till the survey work is over. This noting has been overruled and the proposal was submitted to the Government of India vide letter dated 15-06-2009 after approval of the Hon'ble’ Chief Minister.
On going through the files of Director, Mines and Secretary, Mines it is observed that;
1. The Deputy Commissioner, Bellary has submitted the No Objection Certificate vide his letter dtd. 23-01-2001 stating 10 acres as patta land. But there is no mention of ownership of the land.
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2. The date in the application submitted by the applicant is over written. The dates in all the three applications are overwritten by the same person. 3. The application has been processed in the file of DMG in 2001 dtd. 06-09-2001 as Revenue land.
4. The Deputy Director, Mines, Hospet has submitted false status report stating all 10 acres as patta land. As per the Notification dtd. 27-03-2008 there is 82 acres land in survey no. 28 and there is no mention of any patta land.
5. The request of the Deputy Commissioner, Bellary vide his letter dated 03-06-2008 has been ignored and the proposal is submitted to Government of India after approved by the Hon'ble Chief Minister.
6. The notification dated 15-03-2003 for Block 31/1 of Ramgad has been withdrawn by a Notification dtd.27-03- 2008. The notification dated 27-03-2008 has also been withdrawn vide notification dated 19-03-2011.
7. The records are manipulated to show undue favour to Sri. K.Kumaraswamy.
It is stated here that, all these three files have been processed in a similar manner including the noting in the files. All the proposals have been simultaneously approved at various stages. It seems all the proposal was pursued by Sri Hemanth Sanghvi, M/s. Citi Maritime Pvt. Ltd. The noting’s of the files of all the three files are enclosed. (Annexure 1-3 of Chapter 19 of Dr. U.V. Singh’s Report).
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All the proposals are approved by the Hon'ble Chief Minister, State of Karnataka. The beneficiation utilization certificate is taken from Tata Steel, Jamshedpur which is unlikely to be implemented. This has been done deliberately to fit in the proposals in new mining policy. The Director, Mines has not verified records of the status of the land and submitted the proposal in contravention to the first report of the Hon'ble Lokayukta and the letter dated 03-06-2008 of the Deputy Commissioner, Bellary. The Deputy Commissioner, Bellary in the year 2001 has also erred to submit the No Objection Certificate without proper verification of records. The land in question is forest land. It was a land transferred by the then Maharaja of Sandur to State Government.
The State Government has formulated the Mineral Policy The Karnataka State Minerals Policy 2008 as per the provision para 5.2 (3) the State Government has to promote the grant for mining leases for those who propose to establish industries for value addition within the vicinity of the mineral bearing areas. The relevant para is reproduced as under:
5.2 (3) To promote transparency in granting mining concessions. To maximize value addition to the minerals extracted within the State by encouraging maximum investments in downstream industries. Priority will be given to the applicants who propose establishment of industries for value addition within the vicinity of the mineral bearing areas.
In all above three cases i.e. K.S.L.Swamy, Tornagallu, K. Kumarswamy, M. Mabusab S/o Fakruddin sab, Thyagadal, Sandur the said provision of the policy is ignored and proposals
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were submitted to Central Government for approval. It is to state here that all the three applicants have taken certificate from Tata Steels, Jamshedpur. It is further stated that most of the provisions of the State Mineral Policy is on papers. There have been no concrete efforts so far to implement the policy though it is very frequently discussed at various forums in taking pride in formulating the Minerals Policy in the State.
(4) Wrongful withdrawal of an area of 93.18 Hectares from block no. 13/1 of Ramgad block, Sandur Taluk.
Over an area of 1683.00 hectares of Ramgad block was notified for grant of mining leases to the public vide notification no. CI.33:MMM.1994 dated 15-03-2003. In the said notification block no. 13/1 of Sl. No. 4 was also notified. By without verifying the status of the land for alleged claimants of 37 pattadars the area has been withdrawn of an extent of 93.18 hectares from the notification dated 15-03-2003 by issuing a fresh notification no. CI.03:MMM.2005 dated 27-03-2008. This has encouraged many applicants to create forged documents. Subsequent to this notification many applications have been recommended to Central Government. Some of the cases are K.S.L.Swamy, Tornagallu, K. Kumarswamy, M. Mabusab S/o Fakruddin sab, Thyagadal, Sandur. There may be more cases of this kind. It is learnt that the notification dated 27-03-2008 has been withdrawn dated 19-03-2011 but no action is taken for the cases recommended to the Central Government. It is pertinent to note here that the alleged survey numbers 5-35 are fictitious as per the report of the Deputy Commissioner, Bellary. This entire matter requires in depth investigation. Further action should be initiated against all those officials who were responsible for creating such documents.
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(5) Theft of iron ore from the Ramgad block
a) Illegal mining by M/s Ranka International Pvt Ltd.
The Department of Mines and Geology has had an auction of waste dumps in alleged survey no. 9 of the Ramgad block in 07-09-2006. One company M/s Ranka International Pvt. Ltd represented by its Director Sri Arun B. Ranka has purchased in auction of a quantity of 39000 MT. This auction purchased has been handed with a order of the Director, Mines, Bangalore for final settlement.
During the course of lifting the waste dump and also subsequently Sri Arun B. Ranka and his authorised person Sri G.B. Shivakumar of G.B.S. Logistics, Hospet has unauthorizedly done mining by the side of the waste dump and removed 48168 MT of iron ore of 62 Fe grade of an cost of 9,63,36,000.00 at the rate of Rs. 2000/MT. Sri Arun Ranka and G.B.Shivakumar has committed an offence of theft and violation of Mines and Minerals (Regulation & Development) Act punishable under Section 4 (1) and 21 (1-6) R/W 379 of IPC. It is learnt that there is an offence case pending in the court of the civil judge and JMFC, Sandur.
b) Illegal iron ore mining in alleged survey no. 17 and 18 of Ramgad block.
The Geologist of the office of Hospet Mines has drawn a panchanama on 15-03-2011 regarding illegal extraction of iron ore of an quantity of 720 MT in the alleged survey no. 17 & 18 of Ramgad block. It is stated here that there is no approval of mining lease in the said areas and removal of illegal iron ore
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amounts to violation of Section 4 (1), 4(1)(A) and 21 (1) to (6) of MMDR Act read with 379 of IPC.
It is to state that this piece of land is under dispute for ownership, sale and proposal for mining lease of iron ore. A case in the Court of Civil Judge JMFC, Sandur has been filed against Sri Kesari Prasad Yadav S/o Saligaram Yadav.
c) Illegal mining of iron ore in alleged survey no. 28 of Ramgad block.
Sri Ramlingaya H, Geologist, Department of Mines and Geology, Hospet and his team has drawn an mahazar on 15-03- 2011 stating the in survey no. 28 of Ramgad block an illegal mining of iron ore has been carried out in violation of Section 4 and 25 of MMRD Act. A case has been filed in the Civil Judge, JMFC Court at Sandur making Mrs. H. Ratanamma wife of H. Kumaraswamy as an accused for illegal extraction of 22320 MT of iron ore.
It is to state that a mining lease application has been filed by one Sri K.S.L Swamy having taken consent of owner M/s. H. Ratanamma. The proposal for grant of mining lease in his favour has been recommended to Central Government and it is learnt that the proposal is pending.
Once the consent is given by the alleged owner of the alleged survey no. 28 the filing of case against Mrs. H. Ratnamma may not be proper. Mrs. H. Ratnamma is also not capable to deploy heavy machinery and do the mining. It could be the act of Mr. K.S.L. Swamy who has submitted proposal to the said area. Regarding the irregularities in submission of proposal to Central Government under the MMRD Act, it is
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separately dealt in this chapter. However there may be some political force behind this illegal act of mining. It is to state here that there were 4-5 attempts made in this Ramgad block for illegal extraction of iron ore.
d) Illegal mining in Ramgad block in 2 acres land Ramgad block in Sandur taluk is an elevated plateau having rich iron ore grade deposits. This large deposition of iron ore is focal attraction in the eyes of many iron ore traders. On a complaint of illegal mining in Ramgad block I had inspected the area along with the local forest staff. Some police personnel have also joined while perambulating the area. During the inspection it was found that a full fledged mining was going with illegally deploying heavy machinery and heavy duty trucks for transport. Laborers were also engaged. After a full enquiry and ascertaining the facts a police complaint was given on the spot to the Jurisdictional Inspector stating certain names who were behind the illegal mining. The copy of the complaint is reproduced on page 40 for ready reference. During course of inspection certain events took place on the spot. A report in this regard was submitted to Hon'ble Lokayukta and reproduced on page 43.
The Geologist Sri Ramalingya of DDMG office, Hospet has filed a complaint in the jurisdictional police station. Copy of the complaint was handed over on the spot on 12-09-2009 to the concern Police Inspector. In the said complaint Sri Ramalingya stated that after his perambulation of the area it is found that illegal mining is taking place in an area of above 2.00 acres. Heavy machinery is employed. He further states in his complaint that at spot enquiry it is told to him that the work is being executed by Personal Assistant of Bellary MLA Sri
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Somashekar Reddy and the Corporator Sri Divakar on a direction of the Bellary MLA Sri Somashekar Reddy. No concrete action is taken on this complaint. The complaint is reproduced here: 8
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There were various complaints regarding illegal mining in Ramgad block and in this regard inspection for on the spot status of illegal mining in the said block had been taken up. A
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report in this regard was submitted to the undersigned. The report is reproduced herein:
“INSPECTION REPORT DATED: 12.09.2009 As per your kind direction to me to inspect and report in respect of ground realities about illegal mining and also action taken by various Departments on the report submitted by your kind self to State Government for illegal mining and others in Bellary District, I have inspected the area of Ramgad Block on 12.9.2009. While going to have inspection of M/s. Vrushabendraiah Mines (ML No.2173), I noticed one illegal mining carried out in very recent past, but was not in operation on the day of my visit (dtd.12.9.2009). When enquired from the forest officials accompanied told me that this mine was being done by one Sri Ereswamy, Hospet. They have stopped the mining operation because while doing mining the forest boundary has been destroyed. The area has been photographed. After having inspection to this mine, I further proceeded towards the leased area of M/s. Vrushabendraiah Mines.
On my way to this mine (ML No2173) I noticed another illegal iron ore mine in operation. In this regard, to verify the illegalities of the said mine, I did contact the Deputy Director, Mines, Hospet, over phone. In response to the telephonic message, the Deputy Director, Mines, asked Sri Ramalingaiah H., Senior Geologist, Hospet, to come to the spot for verification. On his arrival, I requested him to enquire the entire matter independently and to take action as per law. Sri Ramalingaiah, Geologist, Hospet, with
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the help of the officials of Forest and Police Departments has enquired the entire illegal mining matter and after satisfying himself, he filed a complaint before the Police Sub-Inspector, Sandur Police Station. The copy of the complaint is enclosed herewith for ready reference. The photographs of the area where the illegal mining is going on with the machineries used in the mining, are also enclosed for ready reference.
Meanwhile, I have inspected the mines of M/s. Vrushabendraiah and found that he is carrying out mining in the encroached area which is a part of the forest land. It may kindly be recalled that in the first report submitted to State Government by your kindself, this area is marked as encroachment in the forest land. It is also marked as a disputed area. The actual quantity of iron ore removed during the period from this encroached forest land would be ascertained either by permits issued by Mines Dept. or by actual measurements by a Competent Authority. The working marks of machinery used for mining at the mines are found fresh (The mining is done after the rain in last week). The mining might have been continued even one day before my spot inspection. This is a serious matter and may kindly be taken note of for necessary action. The photographs pertaining to mining of extraction of iron ore in ML No.2173 of M/s. Vrushabendraiah Mines are enclosed herewith. When I was inspecting the mine, the SP, Lokayukta, Bellary, informed me that Sri Somashekara Reddy, MLA, Bellary, is coming to
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the spot. (where illegal mining is going on). Since MLA was supposed to come to the spot, I decided to stay back at the illegal mining spot. When I was waiting for him, another message came in, informing that he is not visiting the spot, but some of his followers are likely to come over there. At the spot when I was having my food, a person came to me and tried to give his mobile phone asking me to talk to Sri Somashekara Reddy (MLA) who was on the line. I told him that after having my food, I will receive his call. After some time, the same person with same mobile came and told me that Sri Somashekara Reddy is on line and he wants to talk to me. I have received the call. Sri Somashekara Reddy introduced himself on mobile phone saying that he is Somashekara Reddy, MLA, Bellary, brother of District Minister, is on line. He asked me not to proceed in the matter. In turn, I told him categorically that this is a matter of illegal mining and the concerned officials of the Mines, Forest and Police Departments have to enquire and take action as per the law. During the course of conversation over phone, he threatened me saying that whether I have taken the permission to come to Bellary Dist. for inspection of mines from the Bellary District Minister. I replied to him that it is not necessary in a democratic country like ours and I have come over here on the directions of Hon’ble Lokayukta. He went on telling not to proceed in this matter. I finally told him that it is not me, but concerned authorities have to take action in the matter as per law. After 8 to10 minutes, again the same person tried to give me his mobile saying that
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Sri Somashekara Reddy is on the line, I refused to receive that phone call.
After having thorough enquiry, the Senior Geologist Sri Ramalingaiah has filed a complaint before the jurisdictional PSI, Sandur, on the spot itself. The PSI has received the complaint and subsequently registered a FIR. The copies of the complaint and FIR are enclosed herewith for ready reference. It may kindly be noted here that even though specific three names are mentioned in the complaint as accused, the same are not included in the FIR. This may kindly be taken note of.
Further I have over heard that it is being planned to file a complaint against me under the SC/ST Prevention of Atrocities’ Act, 1989, if I persue the above matter of illegal mining. This may be a calculated plan to dilute the main issue of illegal mining and also to create fear to stall the process of impartial investigation. At this point, I submit to assure you Sir that such type of threats will not be able to stop me in my endeavour to curb the illegal mining in the State and Bellary Dist. in particular.
A possession certificate is enclosed herewith in proof of status of the land wherein the above illegal mining is taking place and complaint filed. As per this document the land is stated as Government forest land. In the letter of the then Deputy Commissioner, Bellary Dist., dtd.10.3.2008, it has been categorically stated that there are only four Sy.
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Nos.(1 to 4) in Ramgad village and there is no any other Sy.Nos. constituted as per law.
I have also inspected another mines viz., RMMPL (ML No.2451) in connection with the illegal mining in the disputed area (detected as encroached forest land in the survey). I found that no such illegal mining operations are being taken place within the disputed area in this mine.
I also take an opportunity to submit that shifting of boundaries (by shifting boundary pillars), encroachments and extraction of iron ore in forest and Govt. lands, transportation of iron ore without permits, mushrooming of iron ore stockyards and trespass by way of formation of illegal roads to mines have increased many folds in the Bellary District in last 3 to 4 months. The morale of frontline forest staff is low at all times. A copy of the letter submitted by the field level staff in this regard is enclosed herewith for kind perusal. I had experienced the same during my frequent visits to Bellary District in the month of August, 2009 and September, 2009. This may kindly be taken note of. With these facts and circumstances, I write to submit to your kindself to take needful action in the above said matter. (U.V.Singh) Chief Conservator of Forests. Enclsoures: 1) Complaint filed by the Geologist, Hospet, to PSI, Sandur. 2) Copy of a FIR (Sandur P.S.) 3) Photographs of the illegal mining at Ramgad Block ( platue) the spot in question as stated above.
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4) A CD recorded during the spot investigation on 12.9.2009. 5) A possession certificate showing the status of the land in question. 6) A letter of the DC, Bellary Dist. 7) A letter written by forest officials (lower staff) to RFO dtd.12.08.2009.
I will comment on the incident of 12/9/2009 separately in another chapter.
On the same day the mining lease of M/s. J.M.Vrushabendraiah was also inspected and it was noticed that the mining activities were going on. It is to state here that in the first report it was found that M/s. J.M.Vrushabendraiah has encroached forest land and large quantity of iron ore has been extracted from this encroached forest land. A forest offence case was filed. Against the said offence case a Writ Petition was filed in the High Court. The disputed area was marked based on the order in this Writ Petition. Sri J.M. Vrushabendraiah was found working in this disputed area. There were the marks of machinery working in the said area. Large numbers of MDPs were issued by the Deputy Director, Hospet. A further investigation in this regard is required for violation of the directions of High Court order and also to ascertain the quantity removed from this disputed encroached forest land. The CEC may take note of it.
The Central Empowered Committee (CEC) appointed by the Hon'ble Supreme Court of India has been requested to submit a report in Writ Petition (Civil) No. 562 of 2009 of Samaj Parivarthana Samudaya and Others. Among others the CEC has submitted a detailed report regarding illegal grants of Mining leases in Ramgad Forest block and
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Swamimalai Forest block in Sandur taluk, Bellary District. The copy of the report is enclosed as (Annexure 4 to Chapter 19 of Dr. U.V.Singh’s Report).
After going through the report it is noticed that there are certain more proposals in the Ramgad block submitted by the State Government to Government of India for grant of mining lease in addition to the proposals stated in first report of Hon'ble Lokayukta. The details are given as under:
Sl Name of Appli Status of Extent for Status of Status of Proposa No Applicant ed for land which DC is land as land for l exten shown in given processe which submitt t the consent d in 2001 Director, ed to (Acre applicatio Mines GOI s) n recommen Date ded proposal 1 2 3 4 5 6 7 8 1 K.S.L.Swamy, 10.00 Governme No consent Revenue Patta land 16.06.09 Tornagallu nt given land (Revenue) Land 2 K. Kumara 10.00 Patta land Consent Revenue Patta land 15.06.09 swamy given land 3 M. Mabusab 10.00 Patta land 5 acres for Revenue Private 15.06.09 S/o Fakruddin patta land land land sab, and Thyagadal, remaining 5 Sandur acre for Government land
All the three proposed leases are submitted considering the status of land as patta land contrary to the facts. The other details of submission of proposal at various stages are given in above paras and table. It is relevant to reproduce here the para 18 (ii) of the CEC report:
“ii) Mr. P. Rajashekhar, the then Deputy Conservator of Forests, Bellary Division, vide letter dated 21.11.2007 falsely took the stand that the mining leases of M/s Karkethian Manganese and Iron ore
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(Pvt) Ltd was a non-forest land (refer Annexure 26 and Annexure 25 of this Report). Mr. M.K> Shukla, the then Deputy Conservator of Forests, Bellary Division had issued a false NOC dated 1.9.2005 stating the mining lease area of M/s Balaji was a non-forest land (refer Annexure R-19 and Annexure R- 20 of this Report). Mr. Thippeswamy, the then Range Forest Officer, Sandur Range issued false NOC at least in five cases (refer Annexure R-25 of this Report) stating that the concerned mining lease areas are non-forest land. The details in respect of the other officers of the Revenue Department and Forest Department for issuing false NOCs also should be ascertained and exemplary deterrent action needs to be taken against all the officers involved in issuing false NOCs;”
Agreeing with the observations made by the CEC, action should be taken against all the officers named in the above said para. The State Government should be requested to identify all other officials in Revenue, Forest and Mines Departments responsible for issuing the false NOCs in regard to the status of land in Ramgad block and process of proposals for grant of mining leases. It is to state here that the Deputy Director, Mines has recommended wrongly the status of land in case of the three proposals i.e. 1. K.S.L.Swamy, Tornagallu 2. K. Kumarswamy and 3. M. Mabusab S/o Fakruddin sab, Thyagadal, Sandur as patta land for entire area beyond his competence. The Geologist of his office is also equally responsible for this act. It is also submitted to take all other actions as suggested by the CEC in this matter.
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16) With the above facts and circumstances the following conclusions are drawn by Dr.U.V.Singh, for further needful action.
1. After going through the various records and reports in the matter it is to state that the land in Ramgad block is forest land for the purpose of application of Forest (Conservation) Act, 1980 and the order of the Hon'ble Supreme Court dated 12-12-1996 in W.P.No. 202/1995.
2. The mining leases already approved under the Mines and Minerals (Regulation & Development) Act, 1957 without having the approval of FC Act should be cancelled by following due process of law.
3. Action should be initiated against the then Deputy Conservator of Forests, Bellary for issuing No Objection Certificate dated 01-09- 2005 and also against the then Deputy Conservator of Forests Bellary for taking false stand (Letter dated 21-11-2007) in favour of mining lease of M/s. Kartikeyan Manganese and Iron ore Pvt. Ltd. and all other officials who have been named in the Central Empowered Committee report to Hon'ble Supreme Court dated 14-04-2011 in Writ Petition (Civil) No. 562/2009.
4. Action should be initiated against the then Deputy Commissioner, Bellary, Tahsildar Sandur and others who are responsible for
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issue of No Objection Certificate for the process of proposal for grant of mining leases in favour of K.Kumaraswamy and M.Mabusab.
5. Action should be initiated against the then Director Mines, Secretary Mines, Deputy Director of Mines, Hospet, Geologist and other officials who are responsible for recommendations of the proposals for the KSL Swamy, K.Kumaraswamy and M.Mabusab to Government of India contrary to the facts of status of lands.
6. The Forest Settlement Officer in the matter of declaring the forest land as enclosure without following the procedure under the Karnataka Forest Act, 1963 should be changed with the Deputy Commissioner, Bellary as FSO. The action should also be initiated against the Assistant Commissioner and FSO who is responsible for declaring the enclosure without verifying the fact of the status of land and claims.
7. The proposals submitted to Government of India for grant of mining lease of iron ore in Ramgad block of Sri. KSL Swamy, K.Kumaraswamy and M.Mabusab should immediately be withdrawn.
8. Further enquiry in case of replacing the original applications in all the three cases, over writing of dates in the applications and other
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irregularities should be conducted with the officer of known integrity.
9. The Notification to grant mining lease in favour of Ram Rao Poal has issued after the first report of Hon'ble Lokayukta wherein it was stated that the land in question is forest land. The lease deed has been executed for operation of mining without having approval under the Forest (Conservation) Act 1980. Action should be taken against all the officials who are responsible for this act of notification and execution of mining lease.
10. The three proposals for mining leases i.e. of Sri. KSL Swamy, K.Kumaraswamy and M.Mabusab have been initiated and submitted to Government of India with recommendation to grant mining lease after the first report of the Hon'ble Lokayukta to State Government.
17) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
18) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of
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Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
19) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
20) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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20
ILLEGAL MINING BY M/S. MATHA MINERALS PRIVATE LIMITED (MMPL), BANGALORE
1) A mining lease to an extent of 320 Acres (129.50 Hectares) had been granted in favour of Sri B.R. Amar Singh in Kondli village, Gubbi taluk, Tumkur district for extraction of manganese, limestone, clay, iron ore and others. It is to state that Sri B.R. Amar Singh had applied for grant of mining lease on 23-06-1979 over an area of 1280 acres in various survey numbers of Kondli, Ballanakatte, Karadikal and Mudlapalya villages, Gubbi taluk, Tumkur District. The said area was advertised for re-grant of mining lease on 24.05.79 in Kannada Gazette as required under the then Rule 58 of MC Rules 1960. Previously the entire area was held and worked under ML No. 229 of Sri P.K. Sarangapani Mudaliar. Out of the 1280 acres, Sri B.R. Amar Singh had been granted 320 acres in Kondli village as per the indenture signed on 7th day of May 1985 between the lessee Sri B.R. Amar Singh, Bangalore and the then Director, Mines and Geology. The part (1) of the indenture regarding the boundary and area of lease is quite clear where in Sy. No. 9 of Mudlapalya village is not a part of this lease. The schedule in the indenture (Agreement) is described as under: (Annexure of Chapter-20 at pages 1 to 16 of Dr. U.V. Singh’s Report in this regard).
“On the North by S. No. 83 of Ballanakatte, & S. No. 84 of Kondli & Kardikal S.No. 5.
On the South by part of S no. 84 Kondli & Mudlapalya. On the East by part of S.no. 5 of Kardikal On the West by part of S.No. 84 Kondli.”
With the above schedule of leased land for an extent of 320 acres it is clear that Sy. No. 9 of Mudlapalya is not a part of this
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lease (Annexure of Chapter-20 at page 17 of Dr. U.V. Singh’s Report in this regard).
2) The above said mining lease has been assigned ML No. 1975 and given effect from 07-05-1985 for 20 years. Since then Sri B.R.Amar Singh was doing mining in leased area but complaints were there against him doing manganese mining in encroached area which he went on denying.
3) Subsequently, Sri B.R. Amar Singh has filed an application dated 24-01-1995 for grant of 960 acres (384 hectares) in Sy. No. 84 of Kondli, Sy. no.5 of Kardikal and Sy. No. 9 of Mudlapalya village, Gubbi taluk. This application of Sri B.R. Amar Singh has been rejected by the Government vide its Order dated 30-01-1996.
4) Against the said Order dated 30-01-1996 Sri B.R. Amar Singh filed a Writ Petition in the Hon'ble High Court of Karnataka. The Hon'ble Court in its final order dated 17-06- 1997 has quashed the order dated 30-01-1996 of the Government and directed the second respondent to dispose of the application for grant of mining lease within three months. Due to various other writ petitions and some other reasons this matter has not been finalized. In this connection para 157 to 172 of file no. CI 122 MMM 95 may be seen (Annexure of Chapter-20 at pages 34 to 38 of Dr. U.V. Singh’s Report in this regard).
l 3$U3M$] JwJ8pTt])w|ZJw QrWw$L|±p xwJX8 ']VJ] wJ8 ) r¯¤wp$Lp¨ 0r©to9]8WwY¤uVxHpq]¹}3JwJow$Lp¨rO M$]JwJ8pT{9]-$-$ UwY¤'J¸ 3$L¦$Lp²$L
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lw]zt$]wM8w]z&]V®Ym-$tYY²wp¨&p p wLTw]'8Y®)3JWo$])r¯3JWwp¨w]z&I¹$LL9 rM8Wt] 8 q]¹}3J Yw op$3 J wJo$L|± ZJw$Y )8 ~¯ &wJ¸ $8¸ 3z wLTZ¤Jw 3´Y¯]|± $LLM8 8Z¤8 3Qz± (wJ ) 3´Y¯]|± &poÅ3Tw9 3zwp¨wLTZ¤Jw]qG8(wJzwJw¹8$]) 3´Y¯]|± 3z wLTZ¤Jw 3JW ) 3´Y¯]|± uJ $LLJ &I¹ 4z± -$t q]¹}3J wJo$L wJ8 w$op 3¯w Y8]3 ·t]9]m 'J¸J}¸ 3¹J]3$L¹]~¹ wWG®wY¤38M3({3 3$U3Jr¯¤wp$L$Y&pwo{9]m
V. Muniyappa Minister for Mines & Geology -16.10.2000”
After approval (as in para 171 of the file of Secretary, Mines) by Hon'ble Minister the State Government had modified the original sketch by adding 206 acres of Sy. no. 9 of Mudalapalya village Gomal Land without having prior approval of Central Government under MMRD Act 1957 (Annexure of Chapter-20 at page 18 of Dr. U.V. Singh’s Report in this regard).
5) Whether it is modification of sketch by including additional area of different survey number of different village or grant of mining lease (fresh) for the said area, in both cases prior approval of Government of India is must under the MMRD Act 1957. This has not been taken in this case.
6) The modification of lease sketch extending it to an area of different survey number (Sy. No. 9) of different village is unlawful. The State Government cannot include fresh area without having approval of Government of India under Mines
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and Minerals (Regulation & Development) Act 1957. Hence whatever reasons it could have been, the inclusion of Sy. No. 9 of Mudanapalya village in the modified sketch is beyond the powers of the State Government.
7) After having modified the sketch illegally the lease had been transferred on a letter no. DMG/13 TRN 2002/2298 dated 23-10-2002 of the Director, Mines, Bangalore. A Government Order No.CI: 93: MMM 2002, Bangalore dated 28-01-2003 had been issued for transfer of mining lease number 1975 held by Sri B.R. Amar Singh for manganese, manganese dioxide, dolomite, limestone, iron ore, clay and others over an area of 320 acres with the changed, modified sketch of Kondali and Mudalapalya villages of Gubbi taluk in favour of M/s. Matha Minerals Pvt Ltd (MMPL), Bangalore for the unexpired period of lease i.e. upto 06-05-2005 under Rule 37(1)(a) of MCR 1960 subject to certain conditions. (Annexure of Chapter-20 at pages 19 to 21 of Dr. U.V. Singh’s Report in this regard)
8) Among others the condition number 4 which is reproduced as under is totally misleading; “(4) the total area holding of the transferee shall not exceed the limit of Ten sq. Kms. by this transfer.”
Further, before transferring the new area to the M/s. Matha Minerals Pvt Ltd which was not the part of the mining lease area of B.R. Amar Singh, the State Government has not sought prior approval of Central Government under the MMRD. Hence for transfer of 206 acres of Government land in Sy. No. 9 is totally against the Mines and Minerals (Regulation & Development) Act 1957 and Karnataka Land Revenue (KLR) Act 1964.
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9) After the issue of this Government order, a Form –O (Model form for transfer of mining lease See Rule 37 (a)) was registered in the Sub-Registrar, Gubbi. The schedule of the boundary of area (location and area of the lease) is given as under: (Annexure of Chapter-20 at pages 22 to 28 of Dr. U.V. Singh’s Report in this regard).
“All the tract of lands situated at Part of Sy No. 84 of Kondli village and Part of Sy. No. 9 of Mudalapalya village, Gubbi taluk, Tumkur District in the Registration District Tumkur, bearing Cadestral Survey Nos. 84 & 9 mentioned hereunder containing an area of 320 Acres or thereabout delineated on the plan hereto annexed and thereon coloured in red and bounded as follows:-
ON THE NORTH BY : Part of Sy.No. 84 of Kondli village, & part of Sy. No. 9 of Moodalapalya village
ON THE SOUTH BY : Part of Sy. No. 9 of Moodalapalya village
ON THE EAST BY : Part of Sy. No. 84 of Kondli Village, & Part of Sy.No. 9 of Moodalapalya village AND
ON THE WEST BY : Part of Sy.No. 84 of Kondli Village, & Part of Sy.No. 9 of Moodalapalya village ”
It is to state here that the Schedule of boundary of the leased area originally granted on 07.05.1985 in favour of Sri B.R. Amar Singh is substantially modified and changed if compared to the leased area of this registered transfer indenture
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dated 29-01-2003. It is done by the State Government having no competence.
10) It is further stated here that as per the para 3 of the indenture made on 29th day of January 2003 for transfer of lease, the approval of the transferor and his consent and signature is must on the indenture for the transfer of lease for the following reasons:
(i) The transferor and the transferee declare that they have ensured that the mineral rights over the area for which the mining lease is being transferred vest in the State Government.
(ii) The transferor hereby declares that he has not assigned subject, mortgaged or in any other manner transferred the mining lease now being transferred and that no other person or persons has any right, title or interest where under in the present mining lease being transferred.
(iii) The transferor further declares that he has not entered into or made any agreements, contract or understanding whereby he had been or is being directly or indirectly financed to a substantial extent by or under which the transferor’s operation or understandings were or are being substantially controlled by any person or body or persons other than the transferor.
11) It is pertinent to note here that Sri B.R. Amar Singh is not a signatory to transfer indenture. In the indenture Sri B.S.Puttaraju as GPA holder had signed for Sri B.R.Amar Singh,
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(in place of signature of transferor). The first para of the transfer indenture may be seen in this context which is reproduced as under:
“ The indenture made this Twenty ninth day of January Two thousand three between B.R.Amar Singh No. 9/1A, 9th Cross Chamrajpet Bangalore 560018 (hereinafter referred to as the “Transferor” which expression shall where the context so admits be deemed to include its successors and permitted assigns) of the first part.”
When the facts were so clear the Sub-Registrar, Gubbi should not have allowed registering this transfer indenture without the signature of Sri B.R.Amar Singh.
12) For the Matha Minerals Pvt Ltd (MMPL) Sri B. Naveen, Director has signed as transferee. Hence having not signed by the transferor himself, the process of transfer of lease is incomplete. For the Government the then Director, Mines and Geology has signed the indenture.
13) It is to state here that the mining lease to an extent of 320 acres granted to Sri B.R. Amar Singh with a specific sketch is different than the area transferred in favour of M/s. Matha Minerals Pvt Ltd (MMPL). It is further stated that the mining lease was earlier meant for extraction of manganese as a principal mineral among others. It is noted here that after the transfer of lease, the iron ore has become the main mineral for extraction. It is further pointed out here that this has happened due to “China boom”. The demand of iron ore and its value had increased substantially.
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14) On perusal of records available in the connected files it is noted that there is not much deposition of iron ore including manganese in the first original leased sketch area. The main deposition of minerals remains outside the original approved leased area. To cover up the iron ore deposited area, the sketch (boundary) of the original lease is substantially modified and changed to cover Sy.No.9 of Mudalapalya village. This should have been done with the prior approval of the Central Government.
15) The 20 years period of the lease expired on 06-05-2005. The State Government has issued notification for the first renewal of the lease by a Government order No. CI:217:MMM: 2006 dated 06-10-2007 (Annexure of Chapter-20 at page 41 of Dr. U.V. Singh’s Report in this regard) The schedule of boundaries for this renewed mining lease is described as under: BOUNDARIES:- On the Part of Sy. No. 84 On the Part of Sy. No. 9 of North of Kondli Village. South Mudlapalya village. by by On the Part of Sy. No. 84 On the Part of Sy. No. 84 of East by of Kondli Village West Kondli Village and and Part of Sy. by Part of Sy. No.9 of No. 9 of Mudlapalya Village. Mudlapalya Village
16) A mining lease indenture (agreement) has been signed on 03-04-2009 between the Director, Mines and Geology Sri Shivalinga Murthy on behalf of State Government and the Managing Director Sri B.S. Arun of M/s. Matha Minerals Pvt. Ltd. (Annexure to Chapter 20 of Dr.U.V. Singh’s Report at pages 42-70).
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17) The Schedule of boundaries of original mining lease (ML 1975) granted in favour of B.R. Amar Singh in 1985 is quite different than the Schedule of boundaries renewed in 2007 (Notification dated 06-10-2007). There is no provision under the law to operate in the area without prior approval of GOI under MMRD 1957. Hence, there is a violation of Section 5 of the MMRD Act 1957 and other provisions of Act and Rules. The State Government is not a competent authority to change the Schedule of boundary and area and allow the mining operations in a new area which is not actually approved by GOI under the MMRD Act 1957. The mining carried out (in new area) since 2003 onwards (after the transfer) in an area which is not approved by the Government of India (Ministry of Mines) is illegal and unlawful. It is to be noted here that the extraction of iron ore from the present pit operated by M/s. Matha Minerals Pvt Ltd (MMPL) falls outside the original leased area sketch approved by the Government of India in 1985.
18) From the files of Secretary, Mines it is observed that Mrs. B.R. Vijaya Kumari bai the wife of late Sri B.R. Amar Singh has challenged the order of the State Government for transfer of mining lease to M/s. Matha Minerals Pvt Ltd (MMPL). In this regard the matter was heard in a Revision application by GOI and an order came to issue on 18-08-2008.
19) The Government of India vide its order dated 18-08-2008 in Revision Application no. 13/(6)/2007/RC-1 of Mrs. B.R. Vijayakumari Bai v/s Matha Minerals Pvt Ltd (MMPL) has issued final order in the matter. Some of the paras of the said order are relevant to state here for making the matter more clear and sound as to understand full of matter.
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“16. The State Government, has produced the sketch showing the area held by Shri BR AmarSingh and the area which was transferred to the impleaded party. This sketch clearly indicates that the mining lease area granted to Shri B.R. Amar Singh, vide ML No. 1975 dated 07.05.1985, has substantially been modified and while transferring the mining lease from Shri B.R. Amar Singh to M/s. Matha Minerals Pvt. Limited, the area of the mining lease has been completely altered and modified, without observing the provisions of Mines and Minerals (Regulation & Development) Act, 1957 and without seeking prior approval of the Central Government. The sketch showing the mining lease area of 320 Ha held by Shri BR Amarsingh and the modified area granted to impleaded party shows that only 114 acres of area is common between erstwhile lease of BR Amarsingh and the transferred lease to the impleaded party. The Xerox copy of the sketch showing substantial modification of the mining lease area done by the respondent while transfer of the ML to the impleaded party without prior approval of the Central Government is given in the sketch next page. 21. The State Government of Karnataka has furnished the sketch of the area of the mining lease held by Shri B R AmarSingh and the area transferred to the impleaded party through the impugned order. The respondent have admitted that there was substantial modification of the area originally held by Shri B R Amar Singh and the area transferred to the impleaded party through the impugned order. It is a
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fact available on record that the respondent while substantially modifying the lease area of Shri B.R. Amar Singh and before transferring the new area to the impleaded party which was not the part of the ML area of Shri Amar Singh, the respondent has not sought prior approval of the Central Government under Section 5(1) of MMDR Act 1957 along with other provisions of the act and the rules. The role of the respondent in this case of transfer of mining lease is also not free from doubt.”
20) On going through the files of the Secretary, Mines and Director, Mines and Geology it is noted that the lease transferred to M/s. Matha Minerals Pvt. Ltd (MMPL) by covering an excess area of 206 acres in Sy. No. 9 of Mudlapalya is illegal in eyes of Law. This area does not have approval of Government of India under Section 5 (1) of MMRD Act 1957 and other provisions of the Act and Rules. It is further stated that the case of transfer of mining lease to M/s. Matha Minerals Pvt. Ltd (MMPL) was not transparent and free from doubts.
21) As per the joint survey done by District Task Force there is an identification of more than 37.30 Acres of Gomal land encroached by way of dumping huge over burden by the lessee. This is over and above of 206 acres included in Sy.No.9 of Mudalapalya in the modified sketch wrongly.
22) There were many complaints of encroachments against Sri B.R. Amar Singh since 1990 itself. He was doing mining in the area other than granted to him. There was a penalty imposed on him in this regard at certain point of time. One of the reasons for encroachment was not having good deposition of ore in the original granted leased area. This might have happened because
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of not having any prospecting mining / license before actually operating the extraction under regular lease of ore in large quantity.
23) It is to state that a resolution was passed at the Board Meeting of M/s. Matha Minerals Pvt. Ltd (MMPL) held on 19-09- 2008. As per the resolution, Mr. B.S.Naveen representing Group A shareholders would continue to be the Chairman of the Board of Directors of the Company in pursuance of the clause 17 (c) of the Articles of Association of the Company. In the said resolution it was also resolved that Mr. B.S.Arun representing Group B shareholders would be nominated to be the Managing Director of the Company in pursuance of the clause 17 (d) of the Articles of Association of the Company. Pursuance to this; Form 32 had been filed in the office of Registrar of Companies of Karnataka, Bangalore by Sri B.S. Arun wherein Sri Bangalore Somanna Arun S/o Veeranna Somanna, No. 967, 2nd Main, Vijayanagar, Bangalore has been appointed as Managing Director of M/s. Matha Minerals Pvt. Ltd (MMPL) since 19-09- 2008 (Annexure of Chapter-20 at pages 30 to 33 of Dr. U.V. Singh’s Report in this regard). It is to note here that as per the transfer indenture of lease no. 1975 Sri B.S. Naveen was the Director among others since 29-01-2003. Meanwhile Sri B.S. Puttaraju, Bangalore was also a Managing Director of the Company among others as per the records. Sri B.S. Arun has taken over as Managing Director of the Company since 19-09- 2008 onwards. The mining lease was active during his period till September 2009 as per the information submitted by Deputy Director, Tumkur. The last permit issued for dispatch of iron ore was for 5992 MT on 03-09-2009 for a period 25 days to transport the iron ore to Krishnapatnam port.
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24) The information submitted by Deputy Director, Mines and Geology, Tumkur are as under:
Official quantity of Production and dispatch of iron ore and Manganese.
3¯ w¹ 3v«W]&oJ wL®$8q¸&oJ *Y©]p Jwp *Y©]p Jwp $ wOp¸8 |± wOp¸8 |± wOp¸8 |± wOp¸8 |± 1 2000-01 2 2001-02 3 2002-03 q°$L 4 2003-04 - - 3140 3140 5 2004-05 47500 47163 8767 8767 6 2005-06 311303 311303 561 561 7 2006-07 231169 154136 581 555 8 2007-08 199940 84685 2990 1844 9 2008-09 199400 212806 2980 855 1 2009-10 11484 11484 0 0 0 1 2010-11 q°$L 1 0O 1000796 821577 19019 15722
25) The main pit of the mining lease for the extraction of iron ore as stated in table above is located in survey no. 9 of Mudlapalya village which falls outside the original lease sketch area of mining lease no. 1975 of B.R. Amar Singh. Observing the size of pit and the over burden generated during production (dumping done outside the leased area in Gomal land as encroachment) it is noticed that in excess of permissible limit iron ore had been extracted and dispatched more than what it is shown in the MDP as permitted quantity. Further, there is gap of 179219 MT between quantities produced and dispatched since 2004-05 as per the report of the Deputy Director, Mines, Tumkur. The mine was inspected by Dr. U.V.Singh on 29-05- 2011 along with the Deputy Director, Mines, Tumkur, Deputy Conservator of Forests, Tumkur and their staff and it was found
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that there is some left out ore available at the mining lease site. This should be subtracted from the 179219 MT of iron ore i.e. the difference of production and dispatch. The remaining is a direct case of theft and the loss should be recovered from the lessee. It further requires scientific verification by a Competent Authority for the excess production, dispatch over and above what it is reported by Deputy Director, Tumkur for taking further action to recover the loss incurred to State Government. The representation of M/s. Matha Minerals Private Limited received in this office on 20/7/2011 has also been examined.
26) With the above facts and circumstances and on perusal of records in files of the Secretary, Mines, Director, Mines and Geology following conclusions are drawn for further needful action.
1) The original mining lease ML No. 1975 granted in favour of Sri B.R. Amar Singh on 07-05-1985 to an extent of 320 acres in survey no. 84 of Kondli village with a boundary sketch approved by Government of India has substantially been modified and changed to including an addition area of 206 acres of survey no. 9 of Mudalaplaya village. This action of State Government is illegal and without authority and in violation of Section 5 (1) of MMRD Act 1957 and other provisions of Act and Rules.
2) The mining of iron ore in the area of modified sketch in survey no. 9 of Mudalaplaya is illegal and unlawful which has been carried out since 2003 onwards. All the production of iron ore and manganese in this area is illegal and in
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violation of Section 5 of MMRD Act 1957, Karnataka Land Revenue Act 1964 and other Acts & Rules.
3) There is an encroachment of 37.30 acres over and above outside the modified sketch by way of dumping of huge quantity of over burden waste dumps and pits. It is an irreversible loss to the Gomal land. This way of encroaching the area has deprived the locals of grazing land and the cattle lost their grass land.
4) There is a violation of the Karnataka Land Revenue Act 1964 (Amendment) by way of encroaching the Government Gomal land.
5) In the indenture of transfer of mining lease registered in the office of Sub-registrar, Gubbi, the indenture was not signed by the transferor hence the process of transfer of mining lease is incomplete and illegal.
6) There are many officers involved in this unlawful act of transfer of lease to M/s. Matha Minerals Pvt. Ltd, modification of the original sketch by including an additional new area to an extent of 206 acres of survey no. 9 of the Mudalapalya village before transfer and allowed encroachment to an extent of 37.30 acres at the level of Deputy Director, Geologist and others at Tumkur shall be identified and action should be initiated against them by following due course of Law.
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7) All the quantity of iron produced and dispatched from the survey no. 9 of Mudalapalya is illegal. Hence the market value of the iron ore so produced shall be recovered from the Managing Directors and other concerned of the M/s. Matha Minerals Pvt. Ltd with a penalty of exemplary cost of 5 times of market value. In similar cases the Central Empowered Committee constituted by Hon'ble Supreme Court of India has suggested such values with penalties to be recovered from the lessees responsible.
8) The modification of lease sketch before transfer of lease is illegal and without competence of the State Government under the Mines and Minerals (Regulation & Development) Act 1957.
9) Having multiple illegalities the lease grant shall be cancelled by following due course of Law.
27) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
28) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of
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Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
29) In the case of Sri V. Muniyappa, MLA and former Minister for Mines, it is open for the Government to make assessment of the loss caused due to his misconduct noted in this chapter and take appropriate action against him.
30) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
31) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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21
ILLEGAL MINING IN TUMKUR DISTRICT
In my first report submitted to the Government on 18/12/2008, I had given encroachment details of iron ore leases in Bellary District for needful action. In the said report, I also recommended that mines in Tumkur and Chitradurga Districts should be surveyed by the Governmental agencies. No such survey has been done in Chitradurga District. But the survey was got done in regard to 17 leases in Tumkur District and encroachments were identified by that survey in 13 leases, which are detailed in the annexed report of Dr.U.V. Singh in Table-1 of Chapter-21 of Dr. U.V. Singh’s Report. From the same, it is seen that out of 17 leases surveyed, the team has found 13 leases which have encroached the Government lands, both forest and non-forest to an extent of 143.22 acres either by way of dumping or by extraction of minerals. The names of lessees who have encroached, as detailed in the said report are; (1) M/s. Karnataka Mining Company (ML NO.2333) (2) M/s. Sudarshan Singh (ML No.2579) (3) Smt. Kamalabai (ML NO.2187) (4) Smt. Kamalabai (ML NO.1442) (5) M/s. Upendran (ML No.1957) (6) M/s. Sri Hanuman Mines (ML NO.2220) (7) M/s. Latha Mining Company (ML No.958) (8) M/s. Matha Minerals Private Limited (ML No.2600) (9) M/s. Balaji Produce Company (ML No.2208) (10) M/s. Canara Minerals (ML No.2536) (11) M/s. Teja Works (ML NO.2353) (12) M/s. Tumkur Minerals (ML No.2175) (13) M/s. M.S.R. Gupta (ML NO.2512). The total encroachment estimated in these mining leases, as stated above is 143.22 acres. In some of the leases, the
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encroachment is serious in nature, while in other encroachments, encroached areas have been used for dumping mineral wastes, contrary to law.
2) The Hon’ble Supreme Court of India in W.P. (C) No.562/2009 had issued orders on 6/5/2011 with a direction to the committee appointed by it (CEC) to close down all those mining leases, where it has found encroachments either by way of pits, dumps, roads, etc. It is stated in the report of Dr. U.V. Singh that same yardstick is to be adopted in all the 13 leases mentioned above. The report of the Deputy Director of Mines and Geology, Tumkur says that all the 13 lessees have extracted iron ore from the encroached land, which is detailed in Annexure-2 Sketches 1 to 17 of Chapter 21 of the report of Dr. U.V. Singh referred to herein above. From the above material provided by Dr. U.V.Singh, it is seen from Table-3 that the iron ore/manganese ore measuring 12,91,12,200 MTs have been extracted during the given period and the market value of the illegally mined iron ore, so extracted should be fixed by the Government, taking the rate of that year and as directed by the Hon’ble Supreme Court, the value of the said iron ore, after fixing the relevant rate, should be recovered. In addition, recovery of penalty at the rate of 5 times of that value, as an exemplary case. It has been so done by the CEC in some of the cases. As a matter of caution, I say that the cost fixed by the Director of Mines may not be accepted, since that cost does not reflect the actual market rate.
3) In the report of Dr. U.V.Singh referred to herein above, Table-3, details the illegal extraction of iron ore from the encroached lands by different companies in Tumkur District. I have examined the same and found the following;
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4) Re: M/s. Deepchand Kishanlal (M.L. No.2348): This lease was originally granted in favour of M/s. Mysore Stoneware Pipes and Potteries Limited (MSPPL) for extraction of Manganese and Kaolin in Sondenahalli and Hatyal villages of Chikkanayakana halli Taluk of Tumkur District, over an area of 640 acres for a period of 20 years, with effect from 6/7/1954 to 5/7/1994. On the consent of MSPPL, the Mining Lease had been transferred in favour of M/s. Deepchand Kishanlal by Government of Mysore vide Notification No. CI.123.MNL.57 dated 24/9/1960 for Manganese Ore. Subsequently, vide Notification No. CI.63.MNL. 65 dated 20/6/1962, iron ore was permitted after getting approval of Govt. of India. This approval was given for a period co-terminus with the period of MSPPL. M.L. No. 510 came to be executed in favour of M/s. Deepchand Kishanlan (DK) on 26/6/1962 for iron ore also.
5) M/s. Deepchand Kishanlal filed Renewal application on 2/7/1973 for renewal of M.L. No. 519 for an area of 310 acres in Somanahalli, Sondenahalli and Hatyal Villages referred to herein above. The State Government rejected the renewal application vide its order dated 23/12/1974 on the ground of non-payment of royalty and dead rent. Against the said rejection order of the State Government, M/s.Deepchand Kishanlal filed Revision Petition before the Central Tribunal on 12/3/1975. The Tribunal disposed off the Revision Petition by order dated 22/8/1979 and set aside the rejection order of the State Government with a direction to grant renewal of the lease for iron ore. In compliance, the State Government issued Notification No. CI.100.MNL. 2001 dated 18/3/2002, after a gap of 22 years and much after the lease period expired (6/7/1974 to 5/7/1994). The lease was granted to an extent of 310 acres
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and new M.L. No. 2348 was given to that lease. An agreement was also executed between the Lessee and the State Government on 1/4/2004 for the expired period. The Lessee filed another application for second renewal on 3/2/2001, but the lease has not yet been renewed so far.
6) As per the report of the Deputy Director of Mines and Geology, Tumkur, found at Annexure 1 to the Chapter 21 of Dr. U.V. Singh’s Report at pages 1 to 18, it is seen that the said company has allowed to extract 14,51,924 MTs of iron ore by the then Deputy Directors from 2003-04 to 2007-08. There was no approval of mining lease and other required approval for extraction of iron ore. It is noted here that deemed permission in M.C. Rules does not arise here, since there was no continuity of operation of mining lease since 1974. The operation remains suspended for want of renewal between 1974 and 1994 and thereafter too. This company has extracted totally 14,51,924 MTs of Iron ore during the period from 2003-04 to 2007-08 without there being any mining lease. Thus, the State has to take action to recover the market value of iron ore from this company.
7) Similarly, illegal extractions have taken place by Mysore Stoneware Pipes and Potteries Limited, which is to the tune of 3.00 Lakhs MTs. In the course of investigation, Dr. U.V.Singh’s team found certain areas measuring 3795.17 acres in 7 villages of Tumkur District were notified on 4/8/1994 under Sec. 4 of the Karnataka Forest Act, 1963 and same was published in the Gazette on 31/10/1996. The boundaries were also detailed in the said Notification indicating that for all purposes, the said areas have been declared as forest land. But, while issuing the Notification for the above 7 villages, certain errors have crept in,
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which have been detailed in the report of Dr.U.V.Singh’s team which should be taken note of, by the Government.
8) The Government of Karnataka, should close down all the mines involved in illegal encroachment, especially those which have been noted in the report of Dr.U.V.Singh and encroachment should be removed. Further, for the quantity of minerals already extracted from these encroached areas, the State Government should recover 5 times of the market value, as suggested by the C.E.C appointed by the Hon’ble Supreme Court.
9) In regard to M/s. Deepchand Kishanlal, apart from recovery of the loss suffered by the State Government in the manner stated above, the concerned officers like Deputy Directors of Mines and Geology, who held the office at the relevant point of time should be held responsible for the illegal acts of the company and disciplinary action should be initiated in accordance with law against them. As stated above, total quantity of 14,51,924 MTs of ore extracted by this company and dispatched which is valued at Rs.215,75,86,000/- at the rate of Rs.1,500/- per MT and the same should be recovered. As regards Mysore Stoneware Pipes and Potteries Limited, a proper assessment of extraction of ore illegally should be made and having the assessment, recovery of loss suffered by the State should be made at the rate of 5 times of the market value and the lease should be cancelled by following the due course of law, for violation of M&M (D&R) Act. The same should be done within three months from the date of receipt of this report.
10) Action should be taken against all officials involved in this act. The Forest Department should immediately take up this issue of modifications in the notification as suggested in Dr.
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U.V. Singh’s Report and take up all follow-up actions, without further delay. The matter should be completed within three months from the date of receipt of this Report.
11) It is observed that encroachments have been taken place by way of removal of iron ore from the mines as reported in the Chapter. The Deputy Director of Department of Mines & Geology, Tumkur, issued permits for the iron ore extraction and dispatch. The names of such Deputy Directors should be ascertained and action against such officers under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules should be taken.
12) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
13) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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22
M/S SOUTH WEST MINING COMPANY LIMITED
Dr. U.V. Singh in his Report submitted to me in the above chapter, has discussed some sensitive matters in regard to certain payments made by South West Mining Company Limited to a trust of which the sons of Chief Minister are trustees and so also certain sales effected by the son and son in law of the Chief Minister, of an acre of land in the suburb of Bangalore to M/s South West Mining Company Limited which according to the report is abnormal. 2) Dr. U.V. Singh has in his report traced the possible relationship between Jindal Group of Companies with M/s South West Mining Company Limited.
3) It is found from his report that the Jindal Group has set up its first steel plant in 1982 at Vasind near Mumbai. Soon after, it acquired Piramal Steel Ltd., which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, who had experience in the steel industry, renamed it as Jindal Iron and Steel Co. Ltd. (JISCO). In 1994, the Jindal Vijayanagar Steel Limited (JVSL) with its plant located at Toranagallu in the Bellary-Hospet area of Karnataka has been set up in the heart of the high-grade iron ore belt and spread over 3,700 acres of land. In 2005, JISCO and JVSL merged to form JSW Steel Ltd (JSW).
4) The Jindal Group is one of the largest Groups in the State having a steel plant at Toranagallu. The main supply of iron ore to this Steel plant is from mines in Bellary district. The JSW is also having mines managed jointly with Mysore Minerals Ltd (MML) through Vijayanagar Minerals Pvt. Ltd (VMPL). The mine is known as Timmappanagudi Iron Ore Mine (TIOM). The VMPL is a joint venture Company of JSW and MML. The iron ore is supplied through an agreement and conditions therein. There is
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another Company by name M/s. South West Mining Ltd (SWML) having office at Main Road Old JVSL, Administrative Building, Vidyanagar, Toranagallu. In their letter pad the address is shown as JSW Mining Office, Near Talur Cross, P.O. Vidyanagar-583275, Toranagallu.
5) The details of export and domestic trading of iron ore by M/s. South West Mining Ltd was sought from this office letter dated 07-01-2011 and 20-01-2011. The details so required were submitted by the Company and has been analyzed. For having certain clarification the authorised signatory of the SWML was requested to be present in this office. Sri B.P. Pandey and his associates were present on 03-03-2011. The matter was discussed with respect to the records submitted by M/s. South West Mining Ltd.
6) It is to state that there is a JV (Joint venture) agreement between MML and JSWSL (the then JVSL) for sharing of produce generated out of TIOM Mines. As per the agreement the sharing of iron ore is restricted between the two (MML and JSWSL). There is no provision for selling the iron ore to third party. Contrary to agreement in the year of 2003-04, there was a sale of 85,022 MT by VIMPL to South West Mining Ltd and the same had been exported along with other iron ore. A total 3,65,594 MT have been exported during 2003-04 and 2004-05 by SWML as per the information submitted by them. The MML has not taken any action in this regard.
7) To supply iron ore to JSW Steel Ltd the company has submitted proposal for grant of iron ore mining lease in Donimali range on 18/7/2007. On the same date two more proposals for different locations by SWML and VMPL has also been submitted. The details of proposals submitted by them and
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recommended by State Government in past are pending in Government of India. The details are as under: (table-1)
Table-1 SL Name of Company Extent Area No (Hecters) 1 South West Mining Ltd., 184.14 Donimali Range Vidyanagar, Toranagallu 2 Vijayanagar Minerals Pvt 181.70 Donimali range Ltd 3 JSW Steel Ltd. 188.12 Donimali range
8) It is to state that there are three proposals of grant of mining lease in favour of JSW Steel Ltd, South West Mining Ltd (SWML) and VMPL Ltd pending since 2007, were in active consideration of the State Government for replying a query raised by Ministry of Mines, Government of India regarding whether there is any complaint case pending against the proposals (Govt. of India letter dated 26/2/2010). In another letter, the Govt. of India forwarded a copy of news paper report dated 8/3/2010, which appeared in the “Financial Express” captioned “SC Notice to Center, JSW others on Karnataka Mining Case”. It appears that the Hon’ble High Court Division Bench’s Order dated 5/6/2009 is under adjudication before the Hon’ble Supreme Court. The Govt. of India requested the State Government to furnish the comments in the matter, in the light of the above report. This information was called in the month of March 2010. The Government of India also wanted to know whether the proposals can be processed by the Ministry. The JSW, SWML and VMPL have submitted the letters to the Director, Mines and Secretary, Mines requesting to submit suitable clarification to Ministry of Mines, Government of India so as to process the recommendation of Government of Karnataka in their favour. The copy of the representation is submitted herein as (Annexure to Chapter-22 of
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Dr.U.V.Singh’s Report at pages 1-14). The details of the representations are given as under:
Table-2 Sl Name of Date of To Extent No Company representation Hectare 1 South West 31/3/2010 Director, 184.14 Mining Ltd Mines, B’lore 2 JSW Steel Ltd 5/03/2010 Director, 188.128 Mines, B’lore 3 VMPL 31/03/2010 Director, 181.70 Mines, B’lore 4 JSW Steel Ltd 02/3/2010 The Secretary, 188.128 C&I Dept. Govt. of Karnataka 5 South West 31/3/2010 The Secretary, 184.14 Mining Ltd. C&I Dept. Govt. of Karnataka 6 JSW Steel Ltd 29/7/2010 The Secretary, (Mines) Dept. Govt. of Karnataka
9) It is to be noted that though the above mentioned companies made their application for grant of mining lease on 18/7/2007, the same was not pursued till March-July 2010. By the said time, the Government of India had sought feed-back on certain issues and the Government of Karnataka was to reply to the same. The correspondence made between the companies mentioned herein above and the Government clearly shows that the companies concerned were keen on persuading the Government to send replies to the Government of India in their favour.
10) During the investigation, the Investigating team of the Lokayukta found certain unusual transactions. Hence, to ascertain the particulars of transactions of South West Mining
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Limited, in respect of its purchase and sale, bank accounts details of SWML was requested as per letter dated 18/2/2011. The SWML has submitted the details as under:
Bank Name – State Bank of Mysore Account No. – 64010486365 Branch – JVSL Branch, Toranagallu, Dist. Bellary
11) On perusal of the said account certain abnormal transactions of money has been noticed. The details of the said transaction are given as under: (table-3). (Annexure of Chapter-22 of Dr.U.V.Singh’s Report –pages 15 -27).
Table-3 Sl. Post Value Paid to Cheque Amount Rs. No. Date date No. 1 17.03.10 17.03.10 Prerna 433038 5,00,00,000.00 Education Trust 2 18.03.10 18.03.10 --do-- 433037 5,00,00,000.00
12) From the tables above, it is to state that Rs.10.00 crores have been paid to “Prerana Education Trust” on 17/3/2010 and 18/3/2010. Further, it is to state here that an amount of Rs. 119124000.00 has been credited vide cheque no. 80912 dated 26-02-10 in the account no. 64010486365 of SWMC. The said amount has come from the account of M/s. JSW Steel Ltd. from the bank of Vijaya Bank, JVSL branch, Toranagallu. A letter dated 18/03/2011 of Vijaya Bank is enclosed as Annexure to chapter-22 of Dr.U.V. Singh’s Report. With this trail of transaction it is clear that the amount finally came from the account of JSW Steel Ltd which is paid to the Prerna Trust. There is no trade of iron ore between the two during the period. It is further stated that the balance in the bank account no. 64010486365 of South West Mining Ltd was running under
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overdraft during that period and also in other periods in the range of 3 to 5 crores. If we go by the trail of money transaction it can be construed that Rs.10.00 crores has been paid by JSW to Prerana education Trust.
13) In the subsequent months there are also abnormal payments of heavy amounts in favour of certain individuals. The details of value date, paid to, cheque number and amount is given as under: (table-4). (Annexure of Chapter-22 of Dr.U.V. Singh’s Report – pages 15-27) Table-4 Sl. Value Paid to Cheque Amount Rs. No date No. 1 14.08.10 BY Vijayandra 002419 2,50,00,000.00 2 14.08.10 BY Raghavendra 002418 5,00,00,000.00 3 16.08.10 Sohan Kumar 002420 2,50,00,000.00 4 01.09.10 R.N. Sohan 004369 1,25,00,000.00 Kumar 5 01.09.10 BY Raghavendra 004367 2,50,00,000.00 6 01.09.10 Vijayendra 004368 1,25,00,000.00 7 04.09.10 R.N. Sohan 004444 1,25,00,000.00 Kumar 8 04.09.10 BY Raghavendra 004442 2,50,00,000.00 9 09.09.10 Vijayendra 004443 1,25,00,000.00 Total 20,00,00,000/-
14) On enquiry from the management of the company it was told that the amount of Rs. 20.00 crores was paid for the purchase of land at Bangalore and following details were given: (table-5). Table-5 Date Paid to Chequ Amount Rs. Remarks Sl e No. . N o. 1 11/8/2010 B.Y. 2418 50000000.00 Amount Raghavendra paid 2 11/8/2010 R.N. Sohan 2419 25000000.00 towards Kumar part
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3 11/8/2010 Vijayendra 2422 25000000.00 payment 4 25/8/2010 B.Y. 4367 25000000.00 of Raghavendra purchase 5 25/8/2010 R.N. Sohan 4369 12500000.00 of 1.00 Kumar acre land 6 25/8/2010 Vijayendra 4368 12500000.00 at 7 31/8/2010 B.Y. 4442 25000000.00 Manyata Raghavendra Tech 8 31/8/2010 R.N. Sohan 4444 12500000.00 Park, Kumar Bangalor 9 31/8/2010 Vijayendra 4443 12500000.00 e as per agreemen t dated 28/7/20 10 Total 200000000
15) The South West Mining Ltd has also submitted the details of the land purchase in Bangalore i.e. agreement to sell and sale deed etc. On going through the details for agreement to sell signed between Sri Vijayendra S/o Sri B.S. Yedeurappa and Sri R.N. Sohan Kumar S/o Sri R.D Nataraj and South West Mining Ltd, Vidyanagar, Toranagallu. As per para 2 of Agreement to Sell, (Annexure to Chapter 22 of Dr.U.V.Singh’s Report, at pages 32-39 ) it has been stated that full consideration amount of a sum of Rs.100,000,000.00 (Rupees Ten Crores) has been paid to the vendors by the purchasers (in the month of July 2010). The details of the cheques etc. is kept blank in the said para 2 of Agreement to Sell. It is to be noted here that all the cheques in this regard has been paid in the month of August 2010 and validity dates fall in August and September 2010. The date of the agreement is kept blank but it is signed in July 2010. Hence there is a mismatch recorded in the agreement signed and amount actually credited in the accounts of the vendors. If consideration has been paid on the date of Agreement to Sell of Rs. 10,00,00,000.00 then the payments
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made in August and September 2010 by cheques may not be towards sale consideration.
16) In the second Agreement to sell (Annexure to Chapter 22 of Dr.U.V.Singh’s Report, at pages 32-39), between Sri B.Y. Raghavendra S/o Sri B.S. Yedeurappa and M/s South West Mining Ltd, it has been stated that Rs. 10.00 crore has been paid on the date of agreement to sell, as full consideration towards the entire sale consideration. There are no recorded details of cheques etc. in this para 2 (i) of the Agreement to Sell. In this case also there is a mismatch of recorded details for the amount credited in the account of vendor and the bank details in Agreement to Sell. In this case also if consideration of Rs. 10,00,00,000.00 has been paid on the date of Agreement of Sale, then the payments made in August and September 2010 by cheques may not be towards sale consideration.
17) It is further noted here that the e-stamp certificates are purchased from the Sandur on 28-07-2010 and on the same day (28-07-2010) the Agreement to Sell has been signed at Bangalore. It is further stated that the land value at Rachenahalli Bangalore may not be Rs. 200,000,000.00 per acre. These aspects require further investigation by a competent investigating agency.
18) It is to State here that an amount of Rs. 10,00,00,000=00 has been deposited in the account of SWML from the account of M/s. JSW Steel Ltd, SBM, JVSL Branch of cheque no. 087924 of account no. 0054017410598 on 12-08-2010. Subsequent to this an amount of Rs. 2,50,00,000=00 was paid through cheque no.002419 in favour of B Y Vijayandra and on the same day (14- 08-2010) Rs. 5,00,00,000=00 by cheque no. 002418 paid in favour of BY Raghavendra. Again an amount of Rs.
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2,50,00,000=00 vide cheque no. 002420 paid in favour of R N Sohan Kumar on 16-08-2010. Further an amount of Rs. 5,00,00,000 by cheque no. 066255 has again been credited in the account of South West Mining Company from the account of JSW Steel Ltd, SBM, JVSL Branch account no. 0054017410598 on 31-08-2010. Following this credit, an amount of Rs. 1,25,00,000=00 by cheque no. 004369 in favour of RN Sohan Kumar, Rs. 2,50,00,000=00 by cheque no. 004367 in favour of BY Raghavendra and Rs. 1,25,00,000=00 by cheque no. 004368 in favour of BY Vijayendra have been paid on 01-09-2010. Further an amount of Rs. 1,25,00,000=00 has been paid vide cheque no. 004444 in favour of RN Sohan Kumar and an amount of Rs. 2,50,00,000=00 vide cheque no. 004442 in favour of BY Raghavendra on 04-09-2010. Again an amount of Rs. 1,25,00,000=00 has been paid vide cheque no. 004443 in favour of BY Vijayendra on 09-09-2010. The rest of the amount has been paid by overdraft from the account of South West Mining Limited.
19) It is relevant to state here that large amount has been credited to the account of SWML through RTGS from Karnataka Bank Limited from the account of Jindal Praxair Oxygen Company Limited on 30/6/2010. Subsequent to this an amount of Rs.13,00,00,000=00 has been paid in the account no. 0054017410598 (State Bank of Mysore) of JSW Steel Private Limited on 02-07-2010. Later on an amount of Rs.10,00,00,000.00 from the account of JSW Steel Ltd has been credited in the account of South West Mining Company on 12/8/2010. It is further stated that from 2/7/2010 to 12/8/2010 there is no heavy credit and debit made between JSW Steel Ltd and South West Mining Company. Hence this
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amount in circuitous route has come from M/s. Jindal Parayiar Oxygen Company Ltd.
20) With the above it is inferred that amount which is credited from the account of South West Mining Company to Prerana Education Trust and to vendors Sri. BY Vijayandra, BY Raghavendra and R.N. Sohan Kumar actually has come from the account of JSW Steels Ltd. The payment of such huge amounts creates strong suspicion as to whether such payment is made for getting favour i.e. for submitting a favourable reply to Central Government by the State Government for processing the proposals to grant of iron ore mining leases in favour of JSW, SWML and VMPL. Such possibility cannot be ruled out.
21) From the above facts, it is noticed that M/s South West Mining Company Limited was financially not sound. It had made certain applications for grant of lease simultaneously with Jindal Iron and Steel Company Limited (JISCO) and Jindal Vijayanagar Steel Limited (JVSL) for the grant of certain lands for the purpose of mining of iron ore. These proposals/ applications are pending with the Government of India. It also requires to be noted that the matter was pending at the stage of replying to quarries raised by the Ministry of Mines, Government of India. There were certain Writ Petitions and Special Leave Petitions pending against the above proposals in the months of March 2010 and July 2010. Simultaneously, Government of India also wanted to know whether the proposals can be processed by the Ministry. The JSW, SWML and VMPL have submitted the letters to the Director, Mines and Geology and Secretary, Mines requesting to submit suitable clarification to the Ministry of Mines, Government of India so as to process the recommendation of Government of Karnataka in their favour.
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The copy of the representation is submitted in the report of Dr. U.V. Singh as Annexure to that chapter.
22) From the above facts, it is seen, the source of donation given by SWML to Prerana Trust has come from J.S.W in circuitous manner, which has then donated the said money of Rs.10.00 crores on 17/18.3.2010. It raises a question, why J.S.W had to transfer money to SWML to give donation to the Trust, when it could have directly given it to the Trust, when in reality, SWML was not in a financial condition to make such huge donation. From the nature of transaction, it looks that it is the JWSL which is making the donation through SWML. The circumstances and the manner in which the donation has been made gives rise to the suspicion that this money is not a donation, as it is understood in the common parlance, but money paid for some other consideration. Similarly, the sale of one acre of land by sons and son in law of the Chief Minister in Rachenahalli village to SWML is shrouded with suspicion.
23) In the documents of agreement to sell, it is stated that the entire consideration amount was received on the date the said agreement was signed. But from the records, it is seen that cheques amounting to Rs.20.00 crores were received on different dates, after the date of agreement to sell. The consideration amount paid for purchase of this land again has particularly come from Jindal Praxair Oxygen Company Limited, which transferred this amount to Jindal Steels, which in turn has transferred the money to M/s. SWML, which again in turn paid the same as consideration amount to Chief Minister’s sons and son-in-laws. This type of convoluted transfer, coupled with the contradictions in the agreement of sale and the actual date of payment of consideration, certain creates a genuine doubt.
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24) I have obtained the Notification showing the guidance value of the price of lands in Rachenahalli village. The same indicates that in this village for industrially converted land, the price is Rs.1.24 Crores per acre. The land sold by the family members of the Chief Minister is Industrially converted land. Therefore, taking the highest price shown in the guidance value and compared with the amount received by the family members of the Chief Minister, for one acre in Rachenahalli village, I find it extremely difficult to believe that this huge amount would not have been paid by a company for purchase of one acre of land, where the prevailing price is only 1.24 crores, as sale consideration, that too when the company does not have its own financial capacity to purchase this land. No prudent business person would pay such a huge amount for purchase of one acre of land, unless there was other collateral consideration.
25) I have already noticed that on or about that time of both purchase of the land and donation, three applications were pending before the Government of Karnataka and suitable reply favouring the companies concerned would have been of great advantage to these companies. Therefore, I am of the opinion that these are sham transactions and the donation and the excess payment made to the family members of the Chief Minister, is to get a favourable reply from the State Government to the Central Government. In this background, receipt of money either as donation or as sale consideration amounts to receiving illegal gratification to show an official favour, which is an offence under the Prevention of Corruption Act, 1988. Therefore, I consider it necessary to recommend to the Competent Authority to take appropriate steps to initiate criminal proceedings against the Chief Minister and such other persons who are involved in the said transaction.
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26) With this conclusion, since the report under the Karnataka Lokayukta Act to take action has to be made to Competent Authority, who is His Excellency, the Governor of Karnataka, under Sec. 2(4) of the Karnataka Lokayukta Act, 1984 in the case of the Chief Minister, I will have to send a copy of this Report to His Excellency the Governor of Karnataka. This procedure was followed by me, when in an almost similar situation in regard to a former Chief Minister of Karnataka in the year 2008, while submitting a report to the Government, a separate Report was sent to the then His Excellency the Governor of Karnataka. The same procedure is followed and while the main report is presented to the Government of Karnataka, a copy of this Report will be sent to His Excellency the Governor of Karnataka for taking appropriate action, as recommended above.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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23
ILLEGAL SUPPLY OF EXCESS IRON ORE BY WAY OF OVERLOADING TO J.S.W. STEELS PRIVATE LTD
The Jindal Group has set up its first Steel Plant in 1982 at Vasind near Mumbai. Soon after, it acquired Piramal Steels Limited, which operated a mini steel mill at Tarapur in Maharashtra. The Jindal, who had experience in the Steel Industry renamed it as Jindal Iron and Steel Company Limited (JISCO). In the year 1994, Jindal Vijayanagar Steel Limited (JVSL) with its plant located at Toranagallu in Bellary Hospet area of Karnataka, has been set up in the heart of the high grade iron ore belt spreading over 3,700 acres of land. In 2005, the JISCO and JVSL merged to form J.S.W. Limited. The J.S.W. Steel offers and the entire gamut of steel products, at its plant at Toranagallu in Karnataka, as also in some other places in Maharashtra and Tamilnadu. Dr. U.V.Singh’s report shows that the website view of this company has made the projection by 2020, the company seems to aimed to produce 34 million tons of steel annually with Greenfield integrated steel plants coming up in West Bengal and Jharkhand.
2) The Director and Chief Executive Officer of the J.S.W. Limited has written a letter to the Chief Secretary to Government of Karnataka on 12/4/2011 stating their requirement for steel plants in Karnataka, Maharashtra and Tamilnadu would be about 27.15 million ton (C’ ore, fine)this according to Dr.U.V Singh’s report is on the higher side. The production of the steel and the corresponding iron ore utilization for the years of 2006-07 to 2010-11 as provided by the company in its reply to the office of the Lokayukta is about 9.6MTs for the year 2009-10. Of course the projected requirement is for production of steel and iron ore utilization of J.S.W. Steels. At the request made by Dr. U.V. Singh’s team, on behalf of the
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Lokayukta, the J.S.W. Toranagallu has furnished its receipt of iron ore from April 2009 to July 2010. The information submitted by it have been verified from the employee of the company and conclusions recorded is found at Table-2 of Chapter 23 of the report of Dr. U.V.Singh. According to Dr. U.V. Singh Report Table-2 shows that the J.S.W. received 1,35,79,148 MTs of iron ore at its factory from 60 vendors and out of which, some of them are lessees and others were traders. The truck wise details for these suppliers have been analysed and it is found that some of the suppliers are supplying iron ore in excess to the permissible quantity i.e., more than 16 MT per lorry load. Dr.U.V. Singh also indicates that from the material that is available before the team, it could be inferred that in addition to transporting the iron ore without permits and use of single trip sheet for multiple trips to transport the iron to JSW Steels Ltd.
3) As per the information provided by J.S.W steels to Dr. U.V. Singh’s team, it is noted that 60 companies/Lessees/ Traders are supplying the iron ore to the J.S.W. Steels via road and rail. Truck wise data for the month of April 2009 to July 2010 has been perused and by tallying the quantity that was received by the company it was concluded that large quantity of iron ore is being supplied in excess as over load to the permissible limit. Thus, as per Dr. U.V. Singh’s report, 46 suppliers have been named as suppliers who have supplied the ore over and above as over load, for which the State has not got the value of the mineral.
4) According to the calculation made by Dr.U.V. Singh’s team, if the total quantity of iron ore is calculated by taking 16 MT per lorry, the iron ore transported through trucks to JSW by
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various lessees/traders should have been 65,33,872, but in reality from the records it was found that the J.S.W. during the same period received 78,26,276 MTs, thereby it has received 12,97,707 MTs in excess, which was the quantity of which the State did not get not only the royalty, but also it has suffered loss for which huge amount of market value. The particulars of such illegal materials which are detailed company wise in the report of Dr. U.V. Singh is considered by me herein.
5) Even by excluding the multiple use of some permits which is a common thing in iron ore transportation and ignoring the cases of small quantity of over loading, the finding of Dr. U.V. Singh’s committee is that during the relevant period, at least 12,97,707 MTs of Iron ore was supplied in excess to J.S.W. Limited, which it calculated at the rate of Rs.2,500/- per MT, which was the prevailing market rate at that point of time. The loss suffered by the State comes to Rs.324,42,72,500/- (Rupees Three Hundred Twenty Four crores forty two Lakhs Seventy Two Thousand Five Hundred only). After perusing the report and the materials relied upon by Dr.U.V Singh’s committee and accepted by me the State Govt. should take immediate steps to recover this amount of Rs.324,42,72,500/- for supply of excess illegal iron ore from the suppliers and J.S.W Steels Ltd., and also take suitable action against the transporters for having over loaded and for having transported the stolen materials belonging to the State. In my considered opinion minerals being the property of the state, if removed illegally and transported, the transporter becomes the abettor to the crime of theft.
6) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
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7) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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24
ILLEGALITIES IN MINING LEASE NO. 2186 OF SRI B.R. YOGENDRANATH SINGH
One Sri B.R. Yogendranath Singh was granted a Mining Lease to an extent of 32 Acres (13 Hectares) in Survey No. 225 of Kakubalu Village in Hospet Taluk in Government land. The lease was granted on 28/12/1967 for a period of 20 years for extraction of iron ore. The area granted is a well-grown forest and comes under the definition of forest as per the decision of the Hon’ble Supreme Court in Writ Petition No. 202/1995 dated 12/12/1996, now what is famously known as Godaverman Thirumalpad case. The lease was for a period of 20 years, which got over on 27/12/1987. The first renewal was made on 7/11/1994 for 10 years with retrospective effect from 27/12/1987, which came to an end on 26/12/1997. The lessee filed second renewal application seeking 20 years time as per the letter of Director of Mines and Geology dated 2/8/2010. There was no action for renewal, but the Lessee continued to operate even after the expiry of the 1st renewal. On the direction of the Additional Director (Mines) by his letter dated 24/02/1998 allowed the lessee to do mining, purportedly under Rule 24(a)(6) of the M.C. Rules. It is surprising to note that for nearly 13 years, under the said Rule the lessee was allowed to mine, without renewal of lease and the officials concerned did not take any action. I had mentioned in my first report to the Government that such cases should be dealt immediately under the provisions of Law. But as stated above, no action has been taken in this regard.
2) During the period 2006 to 2011, the lessee purportedly dispatched 15,04,324 MTs of iron ore, the particulars of which can be seen at page 2 of Chapter 24 of Dr. U.V.Singh’s Report,
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held an on-field enquiry at my request and visited this mine 4 times in the last 3 years for inspection purpose. The Hon’ble Supreme Court appointed Central Empowered Committee (CEC for short), Director of Mines and Geology in Karnataka and other officers of the Department of Mines are all of the opinion that this mine has never been operated to that extent of its capacity of extraction and dispatch as shown herein above. On the spot enquiry showed, there is no sign of working for extraction of such a large quantity at the leased area, the condition of road leading to the mines indicates that heavy trucks carrying load have not left with any sign of high traffic movement. Chapter-24 of Dr. U.V. Singh’s Report points out that on record the lessee always keep a quantity of 25 to 30 thousand MTs of stock and the same stock was shown again and again to the authorities to obtain stock certificate time and again. It is certain that permits issued for dispatch of iron ore for this mine is misused for transportation of other iron ore from other unknown source with active connivance of the officials and with political influence. The stock certificates issued by the Engineers for the relevant period, which is seen in page 3 of Chapter-24 at Table -2, indicate that between 19th January 2010 and 21st July 2010, the officials concerned have certified the stock of iron ore fines and iron ore lumps, which is not correct, as per the Report of Dr. U.V. Singh. Table -3 of Chapter 24 of Dr.U.V. Singh’s Report shows huge sums of money running into crores of rupees have been paid as royalty on behalf of the company for purportedly legally mined ores from this lease. But on verification of the accounts from which this amount is paid, clearly indicates that it is not from the account of Sri B.R.Yogendranath Singh, lessee of this mine. These amounts paid as royalty by way of demand drafts are drawn from various Banks and accounts of various other persons/firms/companies which are unconnected to Sri
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B.R. Yogendranath Singh lease. The permits issued for transportation of the said quantity of minerals, when examined showed there are two or more mineral dispatch permits (MDPs), are issued on the same day for the same destination. The reason is obvious that this is being done to facilitate the more persons/firms to use the permit to lift the illegal iron ore from different unknown sources. It is also observed that permits destined to deliver at Belikeri port had not actually been delivered at port or these permits have been issued to cover up the iron ore already delivered at Belikeri by some other vendor or some other person. This has happened after the raid conducted by the Lokayukta police at Belekeri port and seized the records. Such type of activities were planned to cover up the illegal transport of already reached iron ores at Belekeri and exported. These permits are also used for transportation of non- sourced iron ore by collecting the “risk amount” by Sri K.Mahesh and Sri K.V. Nagaraj as reported in other Chapters of this Report. It is stated that the royalty paid was to cover up the illegal activities and even the amount paid is in pittance, if compared to the export value of iron ore as also the domestic value. It is necessary that the State should take note of the entries made by the State Bank of Mysore, shown at table 6 of the Chapter-24 of Dr. U.V. Singh’s Report, to find out the quantity of non-realisation of money due to the State and thus, enquiry should be done without loss of time, less the documents should be lost.
3) It is also to be noted that Sri B.R.Yogendranath Singh has given this lease on “Raising Contract” to M/s. VSL Enterprises (V.S. Lad and sons), having its registered office at House of Lad, Hospet Road, Sandur of which Smt. Aarti A Lad is the proprietress. One of the conditions of Raising Contract was that
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the said contractor had to produce 24000 MTs of ore per year. This lease, which is given on “Raising Contract” is being operated by all means by the said company. During the year 2009-10, the royalty paid is paid by various other firms/persons. It may be either with the consent of the raising contract (VSLMC) or by some extraneous political pressures brought on the lessee. These acts of the Lessee, as well as the Raising Contractor are in violation of Rule 37 (1)(a) and (b), 46 and 48 of M.C. Rules. The Department of Mines and Geology were fully aware of the raising contract and royalty payment by other persons unconnected with mining in this lease. But no action has been initiated. Rather they have connived in the illegal mining activities.
4) On 28/4/2010, the Lokayukta police had searched and seized the records of Mining Lease No. 2186 at Leased area. The said records are perused. The Photostat copies of the said registers seized are enclosed in Annexure to Chapter 24 of Dr.U.V.Singh’s Report at pages 91-531. On perusal of the records it is found that the mine is being operated with the help of labours and the production per year is very low. As per the data compiled for transportation of lumps from the mine it comes out to 21703.58 MTs from 1/4/2009 to 31/3/2010, which were transported in 1200 trips only. The other documents clearly indicate that only minimum mining activities has taken place in this mining. Copy of such seized records were of the year 2008-09 and 2009-10, which are enclosed to the Annexure of Chapter 24 of Dr.U.V. Singh’s Report at pages 91 to 531.
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5) The Director of Mines and Geology had also inspected this lease on 20/5/2011 and has prepared a detailed report in this matter. Copy of the report is enclosed to the Annexure to Chapter 24 of Dr.U.V. Singh’s Report at pages 1 to 3. The quantity of ore lying at mine as stated by the Director is towards higher side. Actually it has been got measured from the Deputy Director of Mines and Geology, Hospet and found that approximately 28,000 MTs is available on 25/6/2011.
6) It is stated that there are no benches made while production of the iron ore. It is being done manually by breaking the stones. On going through the seized records, it is found that there are petty contractors by name Sri Kumarappa, Sri Krishna Nayak, Sri Tara Nayak, Mrs. Sharadamma working under contract with the VSL Mining Company Private Limited for breaking and loading of the limps, etc. On seeing all these factors, it can easily be concluded that there were low level of mining activities had taken place. There is no sign of heavy deployment of machineries, etc. The condition of the road speaks about the number of few vehicles used for transportation of ore from mine head. Very light traffic had been operated on the road.
7) The stock certificates given by Sri Basavaraj and Sri Prakash B.L as shown in Table 2 of Chapter 24 of Dr.U.V.Singh’s Report is highly exaggerated and seems to be false. In fact there is no production in the mine. The lessee has deliberately kept 25 to 30 thousand MTs of ore, so that the same can be shown over and over again when they have take transport permit and pay royalty. There had never been a stock of this quantity as shown in table 2 herein. The stock certificates are given to facilitate to issue permits (MDPs) for
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transportation of iron ore from unknown sources. This mine has been running on proxy basis. The permits are issued by paying the royalty by various persons which is far below the actual value of iron ore (for export and domestic consumption).
8) The details of stock certificates given by Sri Basavaraj, Asst Engineer and Sri Prakash B.L., Superintending Engineer are enclosed to the Chapter-24 of Dr.U.V.Singh’s Report at pages 7 to 21. The stock certificates are perused and it is noted that all the stock certificates are directly placed before the Deputy Director of Mines and Geology. There is no entry in the inward register. There is no measurement recorded of heaps, stocks, etc. It is further noted that the stock certificates given on various dates i.e. 19/1/2010, 6/4/2009, 11/3/2010, 22/3/2010, 29/3/2010 has been signed by the authorized signatory of lease on one day i.e., on 28/4/2010 much after the stock certificates were issued. The details of stock certificates are given in the Table -2 of Chapter-24 of Dr. U.V. Singh’s Report.
9) Against the MDPs issued for the quantity of iron ore fines and iron ore lumps, the royalty paid by various persons who are not the owners, as given in Table 8 of Chapter-24 of Dr.U.V.Singh’s report, for the year of 2009-10 and 2010-11. It is seen that the demand drafts are taken at various banks by different persons, which is in violation of Rule 37 & 46 of M.C. Rules. The name of the banks from where the demand drafts are taken are shown in table 7 of Chapter 24 of Dr.U.V. Singh’s Report.
10) The details of the demand drafts submitted by the lessee to the Deputy Director, Hospet has been further verified with respect to, who had paid/purchased the demand drafts from the
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concerned banks. The details are given at Table 8 in Chapter 24 of Dr.U.V. Singh’s Report. As per the information received from the various Banks, shown at Table-8, indicates the persons and firms are as follows:- i) Sri Manoj Kumar Jain, Resident of Hospet, ii) Sri Abdul Zaid, resident of Hospet iii) Sri Abdul Aleem, resident of Hospet iv) Sri Abdul Nayeem, resident of Hospet, v) Sri Ravi Kumar, resident of Hospet, vi) Sri Mahesha and Sadashiva, Resident of Hospet, vii) Sri K.V. Nagaraja, Resident of Hospet, viii) M.s. Vyshnavianand, resident of Hospet, ix) Sri K.V. Nagaraja, Mrs.K.N. Nandini, Mrs. K.G.Padmini Resident of Hospet, x) Sri K.V. Nagaraja, and Sri K.V.Govindaraja, resident of Hospet. xi) Sri Anil Lad, resident of Sandur, xii) Sri Manjunatha Swamy, Resident of Kudligi, xiii) Sri K.Krishna Naik, Resident of Kudligi, xiv) Sri M. Mallikarjuna, resident of Kudligi, xv) Sri L.R. Chaudary, C/o. M/s. Associated Mining Company, Bellary xvi) M/s.Swastik Steel Hospet Private Limited
The above are the unconnected persons/firms/companies who have purchased the demand drafts and submitted to the office of the Deputy Director of Mines and Geology, Hospet, in favour of issue of MDP for different quantities to various destinations purportedly from M.L. No.2186. It is noted here that the persons who have paid the demand drafts are involved in illegal mining in the Bellary and other adjoining districts. This matter is dealt in other chapters of this report. The details of other demand drafts are not available presently and they should be obtained at the time of contemplated action.
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11) Sl. No.18, 19, 20 of Table 8 of Chapter 24 of Dr.U.V. Singh’s Report shows the payment of royalty by M/s. Associated Mining Company and Swastik Steels who are not the Lessees. Table 9 shows the permits issued for the year 2010-11 allegedly to transport ore from M.L. No.2186. The permits shown in this table indicates that the same could have been used for transport of iron ore from LMC and its surrounded areas, since there is no iron ore available in the mine and at the same time the ore was received at JSW during the period supplied by AMC. It requires further investigation.
12) In the facts and circumstances, Dr.U.V. Singh has drawn the following conclusions;
(1) The Mining Lease No.2186 of B.R. Yogendra- nath Singh at Kakabalu Village is being operated since 1998 (more than 13 years) on Rule 24(a) (6) of M.C. Rules. This is utter misuse of the said Rule.
(2) The lease is given on raising contract to M/s. VSL Enterprises (Proprietress Mrs. Aarti A. Lad) in violation of Rule 37, 46 and 48 of M.C. rules. Appropriate action for cancellation of lease should be taken.
(3) The leased area is a deemed forest as per the definition of forest given by the Hon’ble Supreme Court in its order dated 12/12/1996 in W.P. No.202/1995.
(4) The mining is running with very low activities. It is being operated manually. There are no
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benches and deep pits. The condition of the road indicates that the road is not used for heavy traffic. There were no movements of large number of trucks on the road. The lease is operated on proxy. The MDPs are misused for transportation of illegal iron ore from unknown source.
(5) The Assistant Engineer, Sri Basavaraj and Senior Engineer Sri Prakash B.L. office of the Deputy Director of Mines and Geology, Hospet, have issued false stock certificates for large quantity of iron ore to facilitate to issue MDP to various persons (as a party) for illegal transport of iron ore from different unknown source (proxy permits). The action should be taken against both the engineers, the then Deputy Director, Mines and Geology, Hospet Sri S.P. Raju and all the officials who have processed the files for their connivance with the lessee and others. There could have been an extraneous political pressure also.
(6) The Deputy Director, Mines & Geology, Hospet has issued many bulk permits on the same day for the same destination to facilitate to use these permits for transportation or iron ore from the unknown sources at a time. Action should be initiated against him and also all those persons who had used the proxy permits for transportation of illegal iron ore.
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(7) The royalty has been paid by various persons in the name of lessee. This is done with connivance among the lessee, the vendor/ persons/ firms and the officials of Deputy Director Mines Department and Deputy Director himself. The names figured in table 8 were also engaged in illegal mining activities in this District and neighboring districts. It is to state here that these persons/firms had hatched a conspiracy to transport illegal iron ore from various unknown sources by using these permits. They have well planned networking with the active connivance of the officials of Mines and other departments. Action should be initiated against all of them (as per table 8) for hatching conspiracy to illegal mining.
(8) Some MDP are also issued to cover up the illegal transportation already done earlier to Belekeri, Krishnapatnam, Karwar ports etc. It is to state here that the Lokayukta police had searched and seized records and computers at Belekeri port on 20-02-2010 which was followed by seizer of iron ore by the Forest Department for a quantity of 500000 MT and above. In the seized iron ore at Belekeri and Karwar there was material (directly or indirectly) of almost all the persons as stated in table-8. To cover up the illegal iron ore already transported and exported from Belekeri port by these peoples, this plan had been executed by paying a very negligible amount as royalty and tried to convert illegal iron ore to
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legal at Belekeri port and other places. All such quantity of ore should be treated as illegal and forfeited to Government with exemplary penalty.
(9) It is further observed that the iron ore (small quantity) produced in real terms at lease area have not been transported through permits by the raising contractor or lessee. All such transportation of lumps, red oxide, fines etc. had been done without permits and the cost should be recovered with an exemplary penalty from the lessee or raising contractor. Further, the illegal mining in the year of 2006-07, 2007-08 and 2008-09 should be further investigated in the manner as explained for the year 2009-10.
(10) The records created (audit records etc) by the Deputy Director, Mines, Hospet as if the iron ore is being produced and transported from the lease should be considered as false and should not be taken into account since 2005-06 onwards. All the iron ore shown as produced; dispatched etc should be modified based on the seized records from the mine and as per facts stated above.
(11) In the year of 2010-11 certain MDPs were issued to supply the iron ore to JSW Steels by Laxmi Aruna Minerals, Swastik Steels (Hospet) Pvt Ltd and others allegedly from this mine. Since, no iron is transported from this mine proper action should be initiated against them. All the supplied iron ore in this manner to JSW steel should be recovery of the market cost with
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exemplary penalty of 5 times from the suppliers. Other contemplated action should also be taken.
(12) It is stated here that the them Director, Mines was fully aware above this issue but no action has been initiated by him against the officials who were involved in submitting false certificate, use of proxy permits for illegal iron ore transportation by certain persons and also against the lessee who was involved in such illegal activities sine 2005-06. Action should be initiated against the then Director, Mines for failure to protect the natural resources and allow the mining to run on proxy.
(13) With the above various illegalities committed by the lessee it is a fit case to cancel the lease.
13) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
14) Action should also be taken against Mrs. Aarti A. Lad, M/s. Laxmi Aruna Minerals and all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of loss to the State Government and penal actions should also be resorted to, wherever necessary.
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15) The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
16) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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25
ILLEGAL EXPORT BY NATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDERATION OF INDIA LTD
National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), Head office, New Delhi, Branch office 8, Cunningham Road, Bangalore-560052 is a Co-operative Society governed by the provisions of the Multi-state Co-operative Society Act 2002. A Enquiry Report in the affairs of financial irregularities of the Society has been submitted by Dr. Justice R.R. Misra (Retd.) member and Dr. V.K. Agarwal, Member in November 2008 to the Joint Secretary and Central Registrar of Cooperative Societies, Ministry of Agriculture, Government of India. A copy of this report has been obtained from the Committee.
2) Chapter 4 of the said enquiry report pertaining to Disha Impex, Bangalore reveals certain financial irregularities pertaining to iron ore export in the year 2004-05 and 2005-06. The enquiry report refers certain letters indicating purchase of various quantities of iron ore by M/s. Disha Impex Pvt. Ltd from other vendors like M/s. SMIORE, M/s. Cityline, M/s. Shanthi Minerals, M/s Mysore Minerals Ltd etc.
3) In this regard the NAFED was requested to submit the details of export of iron ore vis-a-vis the source of procurement etc. In response the NAFED has submitted the details of exports and also the source of procurement of iron ore. Together they have stated that NAFED is a nodal agency for procurement of oilseeds, pulses, cotton and others and also engaged in export of onion. They further submit that during the year 2004-05 and 2005-06 NAFED took export of iron ore on Public Private Partnership with the following three parties from Karnataka. But two of the parties are based at Delhi and Mumbai
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1. M/s. Disha Impex Pvt. Ltd, New Delhi 2. M/s. Hemani Transport & Trading Corporation, Bangalore
3. M/s. Swarup Group of Industries, Mumbai.
4) It is further submitted by them that in accordance with the terms of MOU signed between NAFED and the three parties, the said parties were to procure the stock and effect export in NAFEDs name. They submit that M/s. Swarup Group of Industries have not submitted the purchase bills etc.
5) The details of export of iron ore as submitted by NAFED is enclosed here in for ready reference. (Annexure to Chapter-25 at pages 1-5 of Dr. U.V.Singh’s Report). As per this statement the NAFED has exported 318120.165 MT of iron ore to China in 2004-05 and 2005-06. The NAFED has submitted details of procurement for a quantity of 202485.595 MT. Hence difference of 115634.57 MT is unaccounted as per their own statements.
6) As per the MOU signed between NAFED and Disha Impex on 10-03-2004 the Disha Impex is supposed to procure 85000 MT of iron ore fines and 65000 MT of iron ore mud. Some stock was already with them. Hence a total of 150000 MT. The details from Mysore Minerals Ltd (MML) has been obtained in this regard and in response vide their letter dated 23-12.2010 they have provided information from supply of iron ore product to M/s. Disha Impex Pvt. Ltd, New Delhi for the year of 2004-05 and 2005-06. As per their statement 3271.71 MT has been supplied by the MML to Disha Impex. But as per the statement of the NAFED, the Disha Impex has supplied 150665 MT of iron ore for export to them. Since there is no supply from MML to Disha Impex the source of procurement by Disha Impex is quite dubious. There is no match of procurement from MML as per
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the agreement entered between NAFED and Disha Impex. The question arises from where NAFED has purchased the iron ore in violation of Agreement.
7) It is to state further that this office has requested Disha Impex vide letter dated 21-10-2010, 07-12-2010 and 16-12- 2010 to submit the details of purchases of iron ore etc. In their reply vide letter dated 23-10-2010 they have stated that Disha Impex has not purchased any iron ore nor it has exported. They have helped NAFED in procuring and finding buyers. But this is not true as per Agreement between NAFED and Disha Impex Pvt. Ltd. Disha Impex Pvt. Ltd., did not receive the last letter dated 05-02-2011 and the same has returned back. Since there are various anomalies in the records it is a fit case for further investigation. Disha Impex Pvt. Ltd., has not paid any VAT in Karnataka as per the information submitted by the Commercial Taxes Department. There are no details from Swarup Groups of Industries.
8) The vendors from whom the NAFED has claimed to purchase the iron ore for export are 1. Aditya Minerals, Hospet 2. Shanthi Minerals, Hospet 3. Bellary Minerals, Bellary 4. Prasiddhi Minerals, Hospet 5. Rawmet Commodities Pvt. Ltd, Calcutta 6. Y. L Sable, Hospet 7. Sri Srinivas Minerals Trading company, Hospet 8. Mincore Resources Pvt. Ltd 9. Others (lessees) 9) It is to state that all above 8 companies/firms are not the lessees and there is no source of procurement of iron ore
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known. There is no information about the issue of permits in favour of them as a party by Mines and Geology Department and Forest Department. The MML has submitted certain details of supply of 48750 MT of iron ore mud to Shanthi Minerals. It is not known whether the same iron ore mud is supplied further to the NAFED or iron ore is supplied in the name of mud from MML. All the trade transactions and transport of iron ore to various ports is dubious and require further investigation.
10) With the above facts and circumstances the following conclusions are drawn by Dr. U.V.Singh.
(1) The NAFED a Government of India undertaking Cooperative Society has entered into agreements with Disha Impex Pvt. Ltd, Hemani Transport & Trading Corporation and Swarup Group of Industries on Public Private Partnership as per their claim to export iron ore in the year of 2004-05 and 2005-06. But procurement of iron ore as shown is contrary to the Agreement signed.
(2) As per their statement they have exported 318120.165 MT of iron ore in the year of 2004- 05 and 2005-06. They have submitted the statement for 202485.595 MT leaving a gap of 115634.57 MT claimed to be supplied by Swarup Group of Industries, Mumbai. But no details of the group, is forth coming.
(3) Most of the vendors are not lessees (do not have leases in their names) hence the original source
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of procurement of iron ore exported by the NAFED is not known.
(4) As per the agreement between Disha Impex and NAFED the iron ore has not been procured from MML. Hence there is breach of contract and also source of procurement not known. This requires further investigation, by the appropriate authorities.
(5) There were financial irregularities as pointed out by the enquiry committee. Hence in this matter too all transactions of iron ore trade is under the cloud of doubts.
(6) Hence it is recommended to have a further investigation into the matter for illegalities and irregularities in source of procurement and export of iron ore by NAFED.
11) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
12) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
13) The State Government may request the Competent Authority in Govt. of India to take action against NAFED under the relevant Law for export of illegal iron ore.
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14) The State Government should also take up further investigation for the supply of dumps by Mysore Minerals Limited to Disha Impex and others.
15) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
.
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26
PKS (SATYA GRANITES) STOCK YARD
One Sri P.K.Pounraj has applied for registration under Karnataka Value Added Tax Act, 2003 for his firm M/S Sathya Granites, it is shown his business place as Satya Granites, P.K.P. Plot, Kumaraswamy, Temple Street, Nandihalli Cross is a proprietary concern. It is seen that this concern has got two operating stockyards in Sy.No.231 of 18-Hullikunte Village and another one at Sy. No.188 of the same village. Both are being run illegally according to the report of Dr. U.V.Singh. But, no action is taken by the concerned officers. According to the report, an illegal stock of 1,96,088.8 MT was available on the day of quantification in January 2011. It is also reported that this firm was allowing stocking of iron ore to other companies and firms in his stockyards illegally.
2) Dr. U.V.Singh relied upon the letter written to the Deputy Director, Department of Mines, Hospet, wherein the firm has admitted that as on 23/02/2009 it has a stock of 438221 MT of iron ore. It is also mentioned in the report that the firm is involved in purchasing of waste dump of iron ore fines from MML as a proxy. For e.g. it is pointed out certain payment made by Sathya Granites for sale value of waste dump purchased by M/s Bava Mines and Minerals, Mangalore.
3) In the report it is also stated that the Firm was transporting iron ore illegally to Belekeri Port. In the above background I recommend the stock i.e. lying in M/s Satya Granite at 74-Hulihalli Village be confiscated in favour of State Government. Further, various land encroached by the Firm in Sy.No.236 of Hulihalli village should be repossessed by taking action under Section 64 (a) of Karnataka Forest Act. It is stated that there is a case filed before the JMFC Sandur against this
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firm for illegal removal of certain quantity of Iron ore. That case should be properly conducted. In regard to illegally transported iron ore to Belekeri Port, the cost equivalent to export value during that time should be recovered with exemplary penalty.
4) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities.
5) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/-
(N.SANTOSH HEGDE) LOKAYUKTA
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27
MISUSE OF HOLOGRAMS
1) The issue of illegal mining in the State and consequential transportation of the same became uncontrollable, after ‘China Boom”. There were innumerable cases of misuse of bulk permits and trip sheets issued by the Mines Department. To come out of this problem, it was stated it would be worthwhile to make use of Holograms on the trip sheets to differentiate between the fake and genuine permits. In that process in the year 2007-08, the Department of Mines and Geology started using the holograms with a unique identity and number on every trip sheet for every mineral in the State.
2) The Director of Mines and Geology, centralized this system to issue the holograms from his office and in this process, based on the requirements, the Deputy Directors/Senior Geologists from the Districts placed their demand of holograms before the Director, Mines and Geology and he in turn based on availability the holograms issued the same after having the signature of the receiving official. A stock issuing register is maintained in the concerned section in the office of the Director of Mines and Geology.
3) Once the holograms are issued to them, it is taken to the respective offices. The Deputy Directors are supposed to enter them in the stock register. From there it should be issued to the respective case worker who finally issues to the indenters, Lessee/stockyard owner, after obtaining approval from the Deputy Director. In this process, there are stages where the numbers of holograms are recorded in different registers.
4) The Deputy Director of Mines and Geology, Hospet had written a letter dated 23rd June 2010 to the Director of Mines
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and Geology stating about more than 14,000 holograms have not been received in his office at various times. He submitted the details in this regard with the numbers (Annexure of Chapter 27 at Pages 1 to 3 of Dr. U.V.Singh’s Report). On perusal of the letter it is found that the information submitted by the Deputy Director, is misleading and wrong. For example, at Sl. No.10, the information provided by him is factually incorrect. Likewise at Sl. No22, it is stated that 2500 holograms are not received is also incorrect. The fact is that these holograms of the said numbers have been issued to Sri D.Sukhdev Singh Stockyard on 3/6/2010. Further, 2500 holograms at Sl. No.23, of the letter dated 23/6/2010 of the Deputy Director has been recorded as not received. By seeing the entry on the date 8/6/2010 Sl. Nos. 2, 3, 4 and 5 of the issuing register of the office of the Deputy Director, Hospet, there are corrections made by overwriting to facilitate the numbers from 2032501 to 2035000 as not received. In fact, on seeing carefully, the said numbers are getting accommodated within the non-corrected numbers. At this place, mischief with the numbers has been done to accommodate the “non-received” holograms. The corrected number holograms are shown to have been issued in favour of V.S. Lad and then through overwriting it has been changed as non-issued (Annexure of Chapter 27 at Pages 5 & 6 of Dr. U.V.Singh’s Report).
5) During the course of investigation, Dr. U.V. Singh’s team found that the Deputy Director of Mines and Geology, Hospet, had written a letter dated 21/6/2010 to the Director of Mines and Geology stating that he has received holograms from Sl. Nos. 1775001 to 2250000 totaling 470000 holograms. On verifying the stock register of the Director of Mines and Geology, Bangalore for issuing holograms, it is found that the holograms
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from Sl. Nos.1762501 to 1800000 totaling 37,500 has been issued. This has been received and signed by Sri M.S. Manjunath, Superintendent of the office of the Deputy Director of Mines and Geology, Hospet as told by Sri Manjunath on 28/6/2011. Hence, there is missing of 12500 holograms from Sl. Nos. 1762501 to 1775001. These 12500 holograms have not been shown as issued from the office of the Deputy Director of Mines and Geology, Hospet. Hence, in total, 15,700 holograms have been misused. Further, the Deputy Director of Mines and Geology wrote another letter dated 12/1/2011 submitting the details of holograms (Annexure of Chapter 27 at Pages 7 to 17 of Dr. U.V.Singh’s Report).
6) Further, from the letters of the Deputy Director of Mines and Geology Hospet addressed to the Director of Mines and Geology, Bangalore, it is seen that he has taken different stand altogether in all the three letters without referring to his earlier letters to cover up the mischief which had taken place in his office with his full knowledge. It cannot happen without the connivance and without ulterior motive. It is pertinent to state that during this period, the investigation into the matter of theft of seized iron ore at Belekeri port was going on. Also the investigation from this office regarding forged and fake trip sheets seized from Belekeri port was getting highlighted in print media. There is every possibility that these holograms might have been used for creating records connected to the transport of iron ore from Bellary District to Belekeri port.
7) Therefore, there has been theft/misuse of 15700 holograms from the office of the Deputy Director of Mines and Geology, Hospet. By use of these holograms, there could have been transportation of 31,40,000 MTs of iron ore (at the rate of
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20 MTs per lorry load) of a cost of 62,80,00,000/-, which is the loss caused to the State. It is recommended that both criminal and departmental action in this regard should be taken against all the concerned case workers of the office of the Deputy Director of Mines and Geology, Hospet and also against the then Deputy Director of Mines and Geology, Hospet.
8) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
9) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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28
COLLAPSE OF ADMINISTRATIVE AND GOVERNANCE SYSTEM
There are about 132 Mining leases granted in Bellary district. Out of these mining leases, 99 are in Forest areas and 33 are in Government land (non forest) including Patta lands. There are also large track of Agriculture land having deposition of float iron ore up to a depth of 5 to 10 mtrs. The float ore is also available in the Government Revenue land, Forest land and Patta lands.
2. As per Dr. U.V. Singh’s report, there are defunct non renewed leases too in the district. These defunct leases are also the source of illegal ore extraction. Over and above large quantity of iron ores have being extracted illegally from the regular leased areas adopting various modes i.e. by shifting boundary of leases, encroaching in the adjoining Forest and Government land and excess removal from the leased areas. (i.e. in excess of the permitted quantity extracted on nonpayment of royalty). Besides, there were dumps existing near the check dams and other places. There also exist old dumps originated due to mining in the past in Government land and forest lands. Stocks all along the roads in private fields and in Government land are another area for the major sources of illegalities. These places are the target for illegal extraction and unlawful transport of iron ore.
3) Dr. U.V. Singh’s report states that he has gone through the records and feedback from the public, NGO’s and officials and has noted that from 2003 onwards the float ore mining was started in the patta lands. In this act one of the modes was to “lease” a piece of land or land in entire survey number by the farmer (owners) to a trader, who in turn will do the mining
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illegally by engaging heavy machinery, manual labour and then sell it to the middle man or to sponge iron ore industries/steel industries and also for export. It is to be noted here that even if floated ore or other deposits or ore are found in patta lands, the mineral being a major mineral and the same belongs to the Government, the export and sale can only be done under the provisions of M&M (R&D) Act. In Hospet-Sandur-Bellary (BHS) sector, there are unaccounted mushrooming of registered and unregistered iron ore traders. Since last 2 to 3 years, it is observed that due to a big margin of profit in this illegal trade a mafia type of operation have started with the full connivance and support of Politicians, Officials of the Department of Police, RTO, Mines, Forest, Revenue, Commercial Taxes, KSPCB, Labour, Weight and Measurement department and others.
4) Due to heavy extraction from the patta land the ore in such areas exhausted fast and by 2005-06 it became scare. The operations then switched over to Revenue Government Land. This process went up to 2007 to 2008. The ore became depleted in these lands too. Then the operation started in Forest land mainly during 2009-10, 2011. Now, the ore is getting depleted in forest areas also. This has resulted in lifting of all accessible dumps and other seized materials. Further there is excess removal from the leased areas by adopting various mode of operation. It has gone to a large extent as could be seen from the seized documents. In the process large amount of bribes were being paid to officials of all cadres at district level. The details are found in Table-1of Chapter-28 of Dr. U.V. Singh’s report in this regard.
5) The income tax department had conducted raids in the year of 2010 at various premises of iron ore traders, related
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companies, individuals, and others. The office of the Lokayukta has approached to the Income Tax Department, Government of India, Bangalore to exchange the information, documents, electronic devices seized by them during the various raids conducted in 2010. After discussion and correspondence a pen drive was provided to this office containing the contents of materials seized from the premises of Sri Karapudi Mahesh (K. Mahesh). Printouts of the said pen drive were taken and examined. On perusal of records it is found that it has hundreds of pages available in the pen drive. These pages along with others have also been cross checked and verified from the printouts available with the Income Tax Department and found to be tallied. It is in the above said background, the report of Dr. U.V. Singh report on payment of bribe by Karapudi Mahesh and his associates to the Government officials is considered and found that the entire administration, especially in the District of Bellary has failed and the officials have failed to discharge their official duty with sincerity and loyalty to the Government.
6) The material provided in the report of Dr. U.V. Singh shows that the information provided by the Director of Income Tax (Investigation), Bangalore in the form of soft copy (Pen drive) has named ‘Karapudi Mahesh’ vides his letter no. DIT(Inv.)/BNG/138/2010-11/64 dated 21-02-2011. On examination of all the records, a list has been prepared by Dr. U.V.Singh’s team, consolidating the amount paid at various dates to officials of various departments in the form of bribe for getting undue favour. As per this analysis, it is seen that a total amount of Rs.2,46,62,377/- has been paid as bribe (which has been shown as department expenses) to 617 officials of various rank and cadres of all connected departments. It is further stated that this bribing has spread in the Districts of Bellary,
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Chitradurga, Tumkur, Bangalore, Kolar, Davanagere, Haveri, Koppal, Gadag, Raichur, Gulbarga, Bijapur, Bagalkot, Belgaum, Dharwad, North Canara and districts all along the roads from Bellary to Krishnapatnam. The favour extended against the bribe paid are for non checking of overload, trip sheets, way permits, allowing to lift the waste dumps from all type of lands, allowing to extract floating ores from patta lands, Government Revenue land, Forest land, additional excess removal of ore from regular leases, (more than permitted quantity without creating any record) allowing transportation without payment of royalty, Forest development tax, non adhering to other norms under the Mines and Minerals (Regulation & Development) Act, other Acts and Rules. Table-1 of Chapter-28 prepared by Dr. U.V. Singh’s team shows that high level officers are paid huge amount of money, even lower level officers are regularly paid money, depending upon their contribution in helping the illegal mining activities.
7) The report of Dr. U.V. Singh further shows that the records were seized from the premises of Associated Mining Company, Bellary which is inventorised as A/AMC/3 page 15 email from [email protected] to [email protected], which reveals certain information regarding payment of bribe by M/s. Associated Mining Company has been included in Table 1 of Chapter-28. The mode of payment of bribe has been mentioned in form of names of officials, designations or in code. Dr.U.V.Singh in his report states that the information provided in Table-1 in Chapter-29 of Dr. U.V. Singh’s Report is not complete and is restricted to a limited period. The records for the bribes paid before and after the period mentioned is not available. Similarly, the bribes paid by the other group of
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companies, traders and lessees are also not available. But certainly, the payments from those persons cannot be ruled out.
8) Dr. U.V. Singh’s report shows how the racket of extracting, transporting of illegal iron ore without permits or forged permits from various places of BHS region and other districts by certain groups of people has been evolved. This system is called “Risk Amount” (Protection Money). The report of Dr. U.V. Singh has described the Risk Amount as follows:-
“Transportation of iron ore on “Risk”: (Protection) This is a unique illegal method of transportation adopted in BHS region wherein the transportation of “zero material” (illegally mined iron ore) has been guaranteed to reach safely to the destination. Some traders/companies /middlemen have taken this “job” of transportation of “zero material” to various destination by charging “commission” for rendering services taking “risk”. In this phenomenon, the guarantor or “risker” takes the guarantee for safe delivery of the iron ore without any valid transit permits or with permits which he managed to obtain from some source or by using fake permits; everything is being done taking risk. Hence the term “transportation on risk” and the person who takes guarantee “the risker” is being frequently used in the sphere of illegal mining in BHS region. While transporting this illegal material if the vehicle with ore is caught on the way by any of the competent authority, the “guarantor” takes the responsibility to get it released by adopting legal or illegal means and also bear expenses incurred in this process. The
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world ‘zero material’, ‘risk’ and ‘risker’ are frequently used code words in the BHS region. It has been reliably learnt that such persons are having political as well as official nexus. The concerned department’s officials are having full knowledge about this practice.”
9) When I submitted my first report, even though such system was in existence in a small way, enough documentary evidence was not available. Hence, it has not been commented in that report. It is only during continuation of the investigation at this stage and while preparing this report, attempts were made to find out more about this system. In this connection a search and seizure was also carried out at Belekeri port on 20/2/2010. This search and seizure was a turning point in this investigation, which has led to another huge racket. Various records connected to smuggling of illegal iron ore, transport of iron ore using forged permits of Andhra Pradesh for loading materials at Hospet, Sandur, Gadag, Bagalkot, Chitradurga and other places were discovered. The Xerox copies of some forged permits are enclosed separately in the chapter on illegal exports of iron ore in this report. On analyzing these records it is found that large quantity of stolen iron ore was being transported without valid permits and connected records etc required under M&M (R&D) and Rules, Karnataka Forest Act and Rules and other connected Acts & Rules applicable. Subsequent to this seizure, the Income Tax department, Bangalore had also made searches and seized documents, electronic data, computers etc from the premises of iron ore related traders, lessees and others. The information with the Income tax department is shared on exchange basis. In this connection electronic records seized from the premises of Karapudi Mahesh (K. Mahesh) has been
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obtained from the Income Tax department. The electronic data provided by Income Tax department were perused and analyzed. The trails of various Bank Accounts of many traders and lessees etc were verified. The records pertaining to collection of Risk Amount by Sri Karapudi Mahesh and Sri Govind (Govindanna) and their associates have been compiled together with respect to the persons who have paid the “risk amount”. It is commonly known as “risk” or “zero material”. Zero material means transportation of the iron ore without transit permits of Mines and Forest departments and illegally extracted iron ore. The amount paid for this type of transportation is shown in Table-2 of Chapter-28 of Dr. U.V. Singh’s report on this matter.
10) This table shows the amount received by K.Mahesh and Associates. The total amount paid as per this list comes to 40,92,88,860.00. In the above trial, there are 382 traders/ firms/ companies/others engaged in illegal trade of iron ore transport and sale, illegal exports. According to Dr. U.V. Singh, this list is also not complete. It also notes that some of the names in the table of risk amount are of partners in some registered firms or companies. One of such name is Sri Mahendra Jain, who is a partner in M/s. Continent Impex Pvt. Ltd, Bangalore. There may be many such companies involved in illegal trade of iron ore. As stated above, of 40,92,88,860/- in the period of Six months (November 2009 to April 2010) have been collected by Sri Karapudi Mahesh and his Associates.
11) It is seen from the report of Dr. U.V. Singh that the “risk amount” of 75 to 200/- per MT is paid by the iron ore traders to Sri K. Mahesh and his group based on the risk involved i.e. distance of destination, vigilance, checking, (period when some
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checking is going on) State, check posts and many others factors likewise.
12) Dr. Singh’s report on iron ore trade by Sri K.Mahesh and his associates throughout the state by various illegal activities in mining trade, in table (3) of Chapter-28 found in the said report, indicates involvement of traders in this illegal act. In most of the cases no permits are issued in their favour. If at all there are some permits issued, it is for very less quantity and the same permits were reused repeatedly. There were 93 persons/ firms/ companies/others who were engaged through Sri Karapudi Mahesh and his associates during the period. They have had a trade of about Rs. 62,92,36,810/- in a period of 6 months (November 2009 to April 2010). These are indicative figures and the list is not exhaustive. The names figured in the table-3 are very common in illegal iron ore trade. They are also figuring in the table of “Risk payment”. In this regard verification by having cross examination of MDP issued by the Mines department has been done by the investigating team and found that there were no permits issued in most of cases in their favour. (They are not lessees either). Hence the trade of iron ore made by them is illegal and unlawful. The particulars of this type of people involved in this trade are given in Table 3 of Chapter – 28 found in the report of Dr. U.V. Singh.
13) The search and seizure made by the Police wing of the Lokayukta at Belekeri port revels that forged and fake permits purportedly issued by the Mines and Geology department of Andhra Pradesh were used for illegal transport of theft iron ore from Hospet, Sandur Bellary and other taluks. Use of such permits was the main reasons for illegal iron ore transport in the BHS region and also from the surrounding districts. The
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Table-4 of Chapter-28 of the report of Dr. U.V. Singh is a supportive indication of unholy nexus of fake and forged permits obtained and used for illegal transport of iron ore mainly illegally extracted from the various places like forest land, Revenue land and also from regular leases i.e., excess quantity than permitted in Karnataka. As per the said Table-4 of Chapter-28, Rs. 1,11,13,394/- have been paid for procuring such permits. A person by name Sri Sajjan of Hospet was used as agent for this purpose. The other persons involved are Yeriswamy, Mahesh, Ramu, Waheed and others. The forged and fake permits used for transport of iron ore to Belekeri and Karwar port by various agencies and persons are separately dealt in this report. The forged permits were used for transporting iron ore to various destinations like Belekeri, Karwar, Goa, Krishnapatnam, Chennai, Mangalore and steel units inside and outside the State.
14) Dr. U.V. Singh specially noted in his report that there was a well established forest check post at interstate border near Bellary (Hagari check post). This check post was withdrawn by the then Deputy Conservator of Forests, Sri S.Muthaiya in 2008.(whose name figures very prominently in many of the illegal activities). From the records seized from Belekeri port, large numbers of forged permits were found purportedly issued from Andhra Pradesh. With this act of withdrawal of established check post, it is quite clear that Andhra Pradesh origin Xerox copy of bulk permits and forged trip sheets were in use at a large extent to illegal transport of iron ore from the illegal stockyards, permitted stockyards, Forest and Revenue areas and also from regular leases. Stern action should be initiated against Sri S.Muthaiya, the then Deputy Conservator of Forests,
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for this act which had caused hundreds of Crores of rupees loss to State.
15) One of the main reasons for explosive illegal iron ore mining during 2009-2010 was posting of favored officials at strategic posts of Police, Mines, Forest, Revenue and other departments. Because of this, a fearless atmosphere prevailed in the Bellary district. Law of the land was seemed to have been suspended and oral whip was used to keep silent. Consequently administration has allowed to loot the natural resources, in this case the iron ore, which continued without any opposition. Huge bribes were paid. Mafia type operations were the routine practices of the day.
16) It is to be noted that during late 2009, State Government tried to post some upright and officers with known integrity in Revenue, Forest and other departments. Unfortunately, for reasons known to the Government, they were transferred in a fortnight and the same old officers were reposted. This act of withdrawal has further fuelled the corruption to raise its head and it has became a monster, uncontrolled as reflected in the seized documents. It is for the Government to explain as to why this transfer and retransfers has taken place.
17) On careful examination of the electronic records by the investigating team of Dr. U.V. Singh, it is observed that a well equipped intelligence networking was deployed by the “Bosses” involved in illegal operations where their people were placed at strategic places all along the major routes to Krishnapatnam, Belekeri, Karwar and others ports. The trusted personnel’s were deployed/posted with motorbikes, mobile phones and money. Rooms were taken on rent on routes to stay and watch. A parallel administration was in position and operation. Regular
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payments were made to such deployed personnel’s as seen in the seized records. The Government machinery/ administration was totally paralyzed.
18) The Hon'ble Member of Legislative Council Sri K.P. Kondaiah has given a representation vide his letter dated 10/3/2011 to the undersigned enclosing a statement of Hon'ble Chief Minister given in the Legislative Session of July 2010. Sri K.P. Kondaiah has said that the unregistered dealers/ registered dealers who are in business of iron ore trade are having serious impact on the State exchequer and environment. He requested to take action against those who are responsible in this act of illegal mining. He has also submitted the answer to five questions supposed to be made as statement on the floor of the House by the Hon'ble Chief Minister, Karnataka. In one of the reply, the Hon'ble Chief Minister has said that some politicians, bureaucrats of forest and police departments are involved in this illegal business and Government is losing heavy revenue. The Hon'ble Chief Minister has said that about 3.04 crores metric ton of iron ore had been exported illegally without permits from the State. But no tangible action was taken to prevent the admitted illegality by the State Government.
19) It is to be stated here that the statement made by the Hon'ble Chief Minister in the House is highly relevant when compared with facts as reveled from the seized documents of Income Tax Department. The statement given by the Hon'ble Chief Minister in July 2010 is getting reflected in the records. The huge bribes had been paid to officials for illegal transport of stolen iron ore from the districts of Bellary, Chitradurga, Tumkur, Gadag and Bagalkot. The iron ore was smuggled with full support of the Government machinery from Patta land,
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Revenue Land, Forest land and regular leases and also from the seized iron ore dumps by the Mines, Revenue and Forest Departments. This statement of the Chief Minister shows that the Government was in the know of about all the illegal activities and the huge loss that has been suffered by the State. Had there been action on my first report on illegal mining this could not have happened. It could have been kept under control and a large quantity of iron ore which was exported illegally from the State and also domestic consumption which is the property of State could have been saved for future generation. Dr. U.V. Singh has enclosed a copy of the representation dated 10-03-2011 of Sri K.P. Kondaiah, MLC along with his report.
20) On 20/2/2010, as stated above, a search and seizure was conducted by the Lokayukta Police at Belekeri wherein documents, computer (CPU) and other records were seized from the premises of Adani Enterprises and Sri Mallikarjun Shipping Pvt Ltd (SMSPL). A table given below of Sri Mallikarjun Shipping Private Limited, indicates the companies and persons involved in export, the supplier of iron ore to these companies and the stacks at Belekeri port. From the Table (5) of Chapter-28 of Dr. U.V.Singh’s Report, shows that many of the suppliers at Belekeri port are also in the list of payment made for Risk i.e. the transport of illegal extracted mineral without paying proper royalties/ taxes and extracted illegally from the non leased areas as well. It is stated that the list of Belekeri and the list of Karapudi Mahesh are not covering their entire illegal transactions which is an indication that a large quantity of iron ore has been smuggled either by using forged/fake permits or without permits.
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Iron ore details with name of supplier companies name and Stacks at Belekeri Port (SMSPL Premises)
Comp Name Sup Name Stack Krishna fin ragu supu nagedra test ILC ILC BHAVANHALLI ILC CORE (LG) ILC ILC SVK ILC CORE (HG) DLC DLC SVK DLC (HG) DLC DLC JSP DLC (LG) ILC ILC BHAVANHALLI ILC CORE (HG) DLC D L C MAHALAXMI DLC (LG) DLC SVK DANAPUR DLC (HG) DLC DLC HNF DLC (HG) ILC ILC NAGAPPA ILC CORE (HG) DLC JUNJUNBAIL DLC DLC (HG) SESA GOA SESA GOA SEAS GOA DLC DLC VYASNKERI DLC (HG) DLC D L C [PRINTEX] D L C [HG] VSL V S L [STACK 2 ] STACK 2 S V K [JAISINGPUR] DLC LG D L C [J S P] LG DLC D L C MAHALAXMI DLC [HG] DLC DLC DAKSHA D L C DAKSHA ILC ILC BEVINAHALLI ILC FINES D B D B DB SSTA SSTA [JAYALAKSHMI] SSTA BHEEMASAMUDRA DLC (OLC DLC { 2 } DLC DLC [M R K] DLC (LG) SSTA SSTA SSTA MALLIKARJUN SMSK S M S P L JAISINGPUR DLC (DAKSHA) DLC MALLIKARJUN GREEN LOGESTIC S M S P L DLC MAHALAXMI B 3 D L C DLC DLC NAGAPPA D L C [ H G ] ILC ILC NAGAPPA FINES ILC FINES [LG] ARSHAD EXPORT ARSHAD [SKMPL] ARSHAD EXPORT DLC SKMPL B 3 D L C ILC I L C ( T.M ) ILC CORE (HG) MALLIKARJUN R N MINES S M S P L ILC S V K FINES I L C [L G] DLC JUNJUNBAIL (S 3 A) DLC (STACK 3 A )
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DLC MAHALAXMI 2 DLC (LG) DLC DLC SVK D L C ( S 3 A) DLC JUNJUNBAIL (S3 A) DLC (HG) ARSHAD EXPORT ARSHAD S B M ARSHAD CORE SUNRISE SUNRISE S V K SUNRISE CHANDUR CHANDUR CHANDUR SMSPL MALLIKARJUN [JUNJUNBAIL] S M S P L DLC JUNJUNBAIL (S3 A) D L C ( S 3 A) DLC JUNJUNBAIL (S 3) STACK 3 DLC RMTC B 3 D L C DLC DLC (G.G MINES) DLC (G.G MINES) DLC JOHN MINES (DLC) DLC ( S 2 A ) DLC DLC HNF DLC DLC HULIYAR DLC DLC ILC ILC JSP ILC FINES VSL VSL VSL HARSHAD EXPORT HARSHAD HARSHAD DLC JUNJUNBAIL (S 2) DLC (S 2) HG TWENTY FIRST TWENTY FIST CENTURY CENTURY 2 STACK [ 2 ] VSL VSL STACK [2] DLC O L C [D L C] D L C [HG] TWENTY FIRST TWENTY FIRST CENTURY HANUMAN MINES CENTURY TWENTY FIRST CENTURY HANUMAN MINES STACK [ 2 ] DLC MAHALAXMI 2 DLC [2 ][ ILC ILC BHAVANHALLI I L C [L G] MALLIKARJUN EAGAL S M S P L [EAGAL] S M S P L S M S P L MALLIKARJUN [BALEGULI] [KALAGATGI] DLC DLC (S 2 A) DLC ( S 2 A ) DLC DLC (S 2 A) D L C ( S 3 A) S M S P L MALLIKARJUN [BALEGULI] S M S P L [BALAJI] DLC DLC HNF D L C ( S 3 A) ILC ILC BHAVANHALLI ILC FINES DLC AURO MINES D L C DLC DLC MAHALAXMI DLC NAGAPPA [ H G ] ARSHAD GOSHAL ARSHAD EXPORT (LG) ARSHAD (LG) TWENTY FIRST CENTURY JAIN TRANSPORT STACK 3
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ILC P K HALLI ILC FINES P K HALLI FINES MALLIKARJUN EAGAL C S M S P L [EAGAL] ILC ILC [ SMM ] ILC [ H G ] ILC ILC NAGAPPA [ H T ] ILC CORE (HG) SSTA SSTA [AFRA] SSTA P J S OVERSEAS LTD KARTIK LOGESTIC FALCON IMPEX LALMAHAL LTD KT 54/ESK LALMAHAL SVK (JAISINGPUR) DLC HG DLC( A3) HG P J S OVERSEAS SANDEEP LTD ENTERPRIRES FALCON IMPEX I L C ,S M M ILC CORE I L C CORE [HG] SHRI SHAYAIRAM LALMAHAL LTD ASSOCIATS (S S A) LALMAHAL P J S OVERSEAS BHARAT TRADING LTD CO FALCON IMPEX D L C MAHALAXMI DLC A1 D L C A1 ILC ILC BEVINAHALLI I L C [L G] SBL SBL SBL BALAJI BALAJI BALEGULI SMSPL ARSHAD EXPORT SKMPL ( CORE ) ARSHAD (LG) SBL SSTA (REDDY) V S L [2] ILC ILC [ SMM ] I L C [L G] VSL V S L [2] V S L DLC CIPL (VD DLC HALLI) DLC B1 ARSHAD EXPORT ARSHAD [SKMPL] ARSHAD (LG) ILC ILC (PK HALLI) ILC CORE (HG) ILC ILC BHAVANHALLI ILC CORE{LG} DLC DLC THIRUMAL THIRUMAL ILC ILC {H T}CORE ILC CORE{LG} VSL VSL (STACK 3) VSL (STACK 3) D B DB HOSPET DB VSL VSL V S L TWENTY FIRST TWENTY FIRST TWENTY FIRST CENTURY CENTURY CENTURY SHREE BHAIRAVA BHAIRAVA JAGRUTHI ILC ILC Y MINARALS ILC FINES VSL SBL LOGISTICS VSL STACK 3 BHEEMASAMUDRA DLC (OLC D L C
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MALLIKARJUN S M S K [L G] S M S P L DLC HARE KRISHNA B 1 D L C SSTA BHYRAVA (J L) SSTA TWENTY FIRST CENTURY BHOOMIKA ENT STACK 4 ILC ILC NAGAPPA [ H T ] I L C [L G] ILC SWASTIK ILC FINES VSL VSL VSL (STACK 3) DLC D L C [PRINTEX] D L C DLC D L C MAHALAXMI D L C [HG] S V K [JAISINGPUR] DLC LG D L C MALLIKARJUN EAGAL S M S P L SSTA SSTA (REDDY) SSTA SSTA SSTA NADEEM SSTA DLC HULIYAR S M S P L [DLC] ILC GREEN TEX (I L C) ILC FINES ARSHAD EXPORT ARSHAD [SKMPL] ARSHAD CORE OLC DLC [CHITRADURGA] DLC { 2 } ILC ILC NAGAPPA FINES I L C [L G] MALLIKARJUN N G SMSPL LG VSL V S L [STACK 2 ] STACK [2] ARSHAD EXPORT ARSHAD NEB ARSHAD NEB ASHAPURA ASHAPURA ASHAPURA [HG] ARSHAD EXPORT SVK (JSP) LG ARSHAD (LG) P J S OVERSEAS ANAGA LTD ENTERPRICES FALCON IMPEX P J S OVERSEAS LTD PRADEEP TRADERS FALCON IMPEX LALMAHAL LTD SHRI HARA MINES LALMAHAL TWENTY FIRST TWENTY FIRST CENTURY CENTURY... BALAJI P J S OVERSEAS GAJANAN LTD LOGISTICS FALCON IMPEX TWENTY FIRST BHIMA MINES CENTURY TWENTY FIST STACK 3 ILC ILC BHAVANHALLI I L C CORE [HG] ILC I L C SMM ( 1 ) ILC [ H G ] LALMAHAL LTD C I P L LALMAHAL SSTA S S T A (G G MINES) SSTA MALLIKARJUN S L V M S M S P L S V K JAISINGPUR DLC (A7) HG D L C (A7) HG G. E. M L A B G. E. M L A B G. E. M L A B
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P J S OVERSEAS LTD SREE MINERALS FALCON IMPEX MAHALAXMI LALMAHAL LTD ENTERPRISES LALMAHAL MALLIKARJUN MAHALAXMI S M S P L LALMAHAL LTD SRIKANT ASSOCIATES LALMAHAL PJS OVERSEAS LTD ADITYA LOGISTICS FALCON IMPEX
21) From the seized records it is found that many accounts were being operated by Sri K. Mahesh and his associates. Some of the accounts details have been collected from the respective banks and the transactions were cross verified with the seized documents. On verification it is found that the cheque numbers and amount details in both records are matching (the record seized by IT and the accounts obtained from the bank). The matching of such bank transactions further confirm the legitimacy of the seized records that they are true, genuine and should be taken on record for this investigation and any investigation. Table – 6 of Chapter 28 of Dr. U.V. Singh report contains the details of Bank Accounts of Sri Karapudi Mahesh and his Group Associates.
22) There is another method by which the State finance or States Revenue collection has circumvented. On perusal of seized records of Income Tax Department, it is found that several entries of payment of penalties against the illegal transport of theft iron ore (in Karnataka, Andhra Pradesh and others) have been recorded during the period on various dates. The payment of penalty is a proof of illegal transportation and theft of iron ore. It also proves that concerned people are taking the responsibility for transportation illegal iron ore by collecting “risk amount” by Sri K Mahesh and his associates. With the records and field observations it is found for the last 5 months, that the risk amount had been collected at the rate of Rs. 75 to
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Rs. 200 per MT based on the risk involved, distance, State and the relationship with the party. In the five months period Rs. 40,92,88,860/- of risk amount was collected and by dividing this amount to an average of Rs.125 per MT it comes out 3274310.88 MT illegally transported in this period.
23) After the search and seizure of the records of Belekeri by the Lokayukta police on 20/2/2010, the Secretary to Government, Mines & Geology Department and the Director of Mines and Geology were called personally by the undersigned and they were told about the illegal transportation of iron ore, mode of transportation, loss to the State exchequer etc. After this, Mines department had seized about 99 trucks which were used for transporting iron ore without permit or forged permits purportedly issued from Andhra Pradesh. In reality minerals were loaded from Karnataka (Hospet, Sandur etc.) at various illegal and permitted stockyards or leases or others.
24) The original records pertaining to compound of offence case of theft of iron ore for 99 trucks were called for investigation from the Deputy Director, Karwar. There was not a single theft case has been registered under Section 379 of IPC for such a large quantity of stolen iron ore being transported for the purpose of export by Deputy Director mines. It was not a normal theft case but a well planned conspiracy to export the irreversible natural resource i.e. iron ore. A file of the office of Deputy Director, Mines, Karwar has been examined. It is observed from the file that this act of offence has been compounded by putting a meager amount of penalty and much less amount than the cost of the ore (IOC, IOF) (Rs. 690 per MT). It is noted here that the iron ore smuggled was for the purpose
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of export. The export value was about US $ 120 to 140 per MT during that period. This comes out to Rs. 5050/- per MT or more. Due to this act of compounding, there is a huge loss to the State Government and encouragement for theft. Further there was no investigation done to find out the source as from where this iron ore is being smuggled, who are persons behind it and responsible. No criminal case was booked either. In fact the compounding of this offence case has further aggravated the looting of ore.
25) It is further observed that as per the noting made by Deputy Director, Mines, Karwar; out of 99 trucks sized 17 trucks were belonging to Sri Manjunateshwara Minerals, 35 trucks were belonging to Tirumala Minerals & Logistics, 36 trucks were belonging to Eshwara Logistics and 10 trucks were belonging to Safia Minerals. This note also shows compounding fees for all their trucks have been paid by Sri P. Nagaraj of Hospet. Amount so collected is Rs. 21,68,095/- on 6/3/2010 as could be seen in table 7 of Dr. U.V. Singh’s report. Sri P. Nagaraj is an associate of Sri K. Mahesh as reveled from the records. It is pertinent to note here that this amount of Rs.21,68,095/- figures in the record of Karapudi Mahesh as a penalty for 53 vehicles (Karwar 53 vehicle penalty [Nagaraj swamy]) table7. This proves the legitimacy of the seized records. It is also seen here that an amount of Rs. 2,00,000/- was paid as bribe to the then Deputy Director, Karwar and Rs.2,500/- to his office staff. (Karwar DMG Rs. 200000 on 10.03.10, Karwar DMG office Rs, 2500 on 10.03.10 table 1). The entries in this regard are very clear from the seized records. The payment for the rest of the vehicles is not clear as to who has paid the compounding fees.
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26) It is seen from the above that the case of 99 trucks have been dealt arbitrarily in a nontransparent and capricious manner. Had this case been taken seriously, the illegal transport would have been stopped from March 2010 onwards at least. All who are connected in this matter in Government of such illegal transport are keeping closed their eyes either deliberately or forcibly. It is seen from the file of the Deputy Director of Mines & Geology, Karwar that even there is no proper address of the persons who have paid the money for compounding the case. There is no record to show the offence case was booked under 397 IPC or under the M&M (R&D) Act and M.C Rules. The compounding orders were issued individually but amount was received from one person by name P. Nagaraj. It is also not known against whom the offence cases were booked. A fearless atmosphere had been created and the laws and regulations were pushed to corner. The information received subsequently to this office confirms that there was continuous flow of theft iron ore to Belekeri and Karwar ports even after convening a meeting of the officers of the level of Secretary and Director. No Government machinery was working during that period. It is learnt that there were instructions from top not to interfere in this illegal transport.
27) Table 7 & 8 of Dr. U.V.Singh’s report is part of document seized, by the Income Tax Department. The genuineness of this document was verified with the accounts obtained from Axis Bank, Bellary. The account number 2669 and Cheque numbers issued out of this account were verified and found that this account is operated in the name of M/s. Sri Bhakta Markandeshwara Minerals (SBMM), Door No. 93, 3rd Cross, Weavers Co-op Colony, Hospet, Karnataka, 583201. The financial transactions through the cheque numbers stated
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herein have been cross verified with this account and it is found that most of the cheque numbers and corresponding amount are matching. The copy of the said bank account no. 909020039582669 of SBMM. From the above it is clear that proxy accounts were opened to transfer illegally earned money to “G.J.Reddy Sir.”
28) Table-9 in Dr. U.V. Singh’s report refers to Bank transactions pertain to Account No. 909020039582669 of Axis Bank, Bellary of SBMM. Table 10 pertains to Bank transactions at Account No. 267010200016667 of Sri Lakshmi Venketeshwara Minerals, Hospet in Axis bank, Bellary. The entries of Statement of Account No: 267010200016667 of Axis Bank, Bellary of Sri Lakshmi Venkateshwara Minerals (SLVM), and table (8) have also been verified and found matching. The contents of the table 8 also indicates payments for dumps, rate (Rs100/ton) Chitradurga etc. This shows widespread net of illegal mining activities.
29) On verification of the entries in table (8) with respect to account no. 909020039582669 of Axis Bank, Bellary of SBMM, the cheque number and respective amounts is found matching. Hence there is no doubt whatsoever that the information in the table (8) is genuine one and can be taken as evidence for any proceedings. Taking the table (8) into consideration, the amount drawn as cash from both the accounts (2669 of SBMM and 16667 of SLVM) reaches to “Sri G.J. Reddy Sir.” As stated in Table-8 of Chapter-28 the risk amount is withdrawn through self cheque and paid finally. This matter requires further investigation in depth by the competent authorities.
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30) It is also mentioned that Sri K. Mahesh and his Associates were managing various plots (stockyards), machinery and others. Many personals were kept to manage such activities. A list of such persons along with their place etc. are given in Table-11 of Chapter-28 of the report of Dr. U.V. Singh. The engagement of such large personals itself indicates the quantum of illegal mining activities in the field of iron trade.
31) The movement of vehicles loaded with iron ore from one place to other within the State were used without having any permits. The iron ore material moved in this manner were largely illegal. To substantiate this logic table 12 of Dr.U.V. Singh’s report indicates movement of vehicles from one plot to other or source of iron ore to midway destination. The said table also indicates that source of iron ore to its destination with quantity and amount charged per metric ton. It is mentioned that the illegalities during the period of 2009-10 and 2010-11 were at its highest.
32) The seized records of Income Tax Department titled as A/MKV/5 Bellary 25/10/2010 have been examined by Dr. U.V. Singh. There are records of payments made by the Madhukumar Varma (MKV) to various persons and other expenses. It is mentioned that Sri Madhukumar Varma aged 24 years is a Managing Partner in the firm M/s. Madhushree Enterprises. This firm is involved in many illegal mining activities in the State. The reference being made here is necessary to find out the networking exist and the persons involved the illegal mining activities directly or indirectly. Table 13 of Dr. U.V. Singh’s report shows the payment made by Madhukar Verma (MKV).
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33) Further, during the examination of records, certain information are observed regarding payment of “Hawala charges”. Though the amount is not very high but it indicates that route of flow of money from outside to the Country. During analysis of the under-invoicing it is found that money received against the export is being parked outside the country. Getting this money through hawala is a common practice in the country. The information in hand may be the part of it. A further investigation in this regard by a Competent Agency is required. Table 14 of Dr.U.V. Singh’s report shows the Hawala money transactions.
34) The role of district administration and the regulatory authorities is extremely vital in ensuring that the mining activities are conducted in accordance with the rules and regulations. The level and spread of illicit mining activities as detailed in this report does point to failure of these agencies in their executing duties. It is noted that the administrative machinery in the districts was rendered ineffective by posting pliant officials across departments. In fact a few officials have actively colluded in facilitating an enabling environment for illicit activities. Nevertheless, it is also observed that whenever the administration has been strict in enforcing rules and regulations, as evidenced in Oct 2009 when the District level officials in Bellary were replaced for a fortnight the activities related to illicit iron ore were brought under control in that period.
35) To give one example, when Sri Bishwajit Mishra, Deputy Conservator of Forests, who is presently working with Dr. U.V.
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Singh’s team in the Lokayukta enquiry, was posted in Bellary as Deputy Conservator of Forests in 2008. He brought a remarkable change by effectively controlling the illegal activities in the forest land. He was also successful in booking forest offence cases against the mining lessees, who had encroached in forest land. He actively cooperated with Dr. U.V. Singh and his team who were conducting joint survey, in GIS and satellite imagery map. He brought about various process changes in order to streamline the various way-permits, thus bringing in transparency and better compliance of Rules and Regulations. He also initiated strict actions against those who were involved in illicit extraction and transportation of iron ore in violation of Forest Act and Rules. Thus he brought discipline and motives, resulting in effective control of illicit mining. However, the said officer was transferred after a short period of 6 months. Interestingly, he was posted back to the same post in Bellary in October 2009. This was the time when mass transfer of officials were made from and to Bellary. This was a short-lived transfer. Even then, during the period of two weeks, this officer was instrumental in significantly controlling the illicit mining activities. The officer is successful in recovering 20.00 crores, which was due as Forest Development Tax from the Mining Companies in a short period of 10 days. Inspite of the same, he was re-transferred out of Bellary. His case clearly shows that efficient, diligent, honest officer can bring about a clean administration, which is sadly lacking in Bellary.
36) While discussing the collapse of administration, I will have to refer to one another main reasons for failure of administration in Bellary. In my opinion, it is mainly because of the fact that a Minister in the Cabinet who is involved in mining has been made the Minister incharge of the Bellary District, who
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has manipulated his power as Minister incharge of the District to his advantage and has indulged in illegal mining, through companies and firms of which he was Director/partner and his supporters by misusing the administration. Further, this Minister when took over as Incharge Minister of Bellary District, the entire administration system of mining has drastically changed. In other words, the system and officials were used by the Minister to the personal advantage of himself and his family. He has used the officials for the other mining companies to share their produce on the promise of providing the other mining companies/firms with all necessary permits and assuring them a free and uninterrupted transportation of their material to the destination of their choice. The system has come to be known as “Zero Risk System”. There are instances when those companies or miners who did not agree to cooperate and accede to the demand of the minister or his followers, such companies/firms were refused transport permits, thus making the transportation of their produce impossible. The Minister has also used his muscle power and has organized trespassing into the mines owned by individuals/companies and compelled such companies to execute agreements on the basis of raising contract, which itself was held by me in my first report as a system unknown Law. No officer would dare to question his acts. Per contra, they supported his acts either for consideration or out of fear.
37) Very sadly, the Government at Bangalore, though knew about all these irregularities, did not take any action to stop these irregularities, may be on the ground that this Minister and his followers are originally responsible for supporting and appointing the Chief Minister. The Chief Minister has reportedly stated once that there are irregularities happening in Bellary.
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But he is unable to stop it. The officials who were to work in Bellary and surrounding area were handpicked by this Minister, whether belonging to his portfolio or not they were posted in Bellary. At one stage, when the Minister and Chief Minister felt apart all the officials were transferred from Bellary. But the clout of this Minister was such that within a couple of days of the transfer, officers were reposted to their original places in Bellary.
38) When I submitted my first Mining Report, I hoped that illegal mining would be reduced in the Districts of Bellary, Chitradurga and Tumkur. But I am sorry to note that, the same has been increased very much after my first report, mainly because of the failure of the Government to implement that report. After this Minister took over as Minister Incharge of the District, the Bellary District came to be referred to as “Republic of Bellary”.
39) At this stage, I would like to recall an incidence, which took place on 12/9/2009, which is referred to in another chapter of this Report. I will make a brief reference to the facts of that case. When Dr. U.V. Singh, on a reliable report that there was some illegal iron ore mining was taking place in Bellary District and found that information to be true, he went to the spot, where he was confronted by certain people by saying that the mining is being done by a person connected to Sri Somashekara Reddy, Member of Legislative Assembly, and brother of the Minister incharge of the District. Dr. U.V. Singh was made to talk with Mr. Somashekara Reddy on cell phone. When Mr. Somashekara Reddy asked him a pointed question, whether he has taken permission of the Minister incharge of
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Bellary to enter Bellary, Dr. U.V. Singh replied that as a citizen of India, he does not require anybody’s permission to visit Bellary. Later on, Dr. U.V. Singh, overheard the people who had approached him talking about filing of a SC/ST Atrocity case against him. These facts have been reported to me by Dr. U.V. Singh’s letter, which is reproduced in another chapter of this report. The facts narrated herein above clearly shows that the administration in Bellary has totally collapsed. Sadly, the person in the helm of affairs of administration in Karnataka reportedly pleaded helpless.
40) Considering the vital role of administration at district, taluk and below to control illegal mining, it is recommended that officials must be carefully chosen for posting in mining districts.
41) With the above facts and circumstances the following conclusions are drawn for needful action.
(1) On perusal of documents provided by Income Tax Department it is an eye opener as regard large scale corruption prevailing in the Government administration. The corruption prevailed in all the Departments connected directly to even remotely to mining.
(2) The information is available only of a group of persons involved in illegal mining activities. It cannot be ruled out similar such corrupt practices by others in various capacities.
(3) The information from the seized records, it is found that Sri Karapudi Mahesh and his associates were fully involved in illegal mining in Bellary District and also
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others districts of iron ore belt. To carry out such illegal mining activities huge amount of money has been paid as bribe to Government Officials and other connected persons.
(4) The bribe money was paid to the official of Districts of Bellary, Chitradurga, Tumkur, Bangalore, Kolar, Davanagere, Haveri, Koppal, Gadag, Raichur, Gulbarga, Bijapur, Bagalkot, Belgaum, Dharwad, North Canara and districts all along the roads from Bellary to Krishnapatnam to get undue favour.
(5) An approximate amount of Rs. 24662377.00 has been paid to 617 officials and others. The list of officials (names and designations) and others is provided in table (1). Since the money is accepted as bribe for showing undue favour (Public servant taking gratification other than legal remuneration in respect of an official act) action should be initiated under Prevention of Corruption Act 1988 against all those officials whose names and designations are figured in the Table-1 of Chapter-28 of Dr. U.V.Singh’s Report. Further the amount received by them should be recovered and forfeited to State Government after following due process of Law.
(6) Action should also be initiated against Sri K. Mahesh and his associates who have paid money to the officials and others for carrying out illegal mining activities.
(7) An approximate amount of Rs. 40,92,88,860.00 has been received by Sri K. Mahesh and his associates as “risk amount”. The risk amount as explained in the text
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has been paid by 382 persons/ firms/ companies/ others table (2). The risk amount is paid for transportation of illegal iron ore to various places hence the entire amount is paid for illegal activities and should be recovered from him after following due process of Law. The amount should be forfeited to State Government. Other contemplated action against Sri K. Mahesh and his associates and also those who have paid the risk amount should be initiated. (8) An approximate amount of Rs. 629236810.00 for illegal iron ore trading have been paid to Sri K. Mahesh and associates which might have reached to certain powerful politicians in the district. This trading amount should be recovered by following the provisions of Law. (table-3).
(9) An amount of Rs. 1,11,13,394.00 had been paid to obtain fake permits from Andhra Pradesh and permits of other leases from the officials of Mines and Forest in the district and outside the district. In this regard Sri Sajjan, Wahid, Mahesh, Yariswamy and others have acted as agents to obtain such permits (Table-4 of Chapter-28). A further investigation is required in this matter.
(10) An amount of Rs.4,79,03,917.00 has been paid to “Sri. G.J.Reddy Sir” as Bellary risk amount (Table-8 of Chapter-28). Of course this is not a final figure. It is noted that the amount has been paid through the bank accounts of Axis bank, Bellary A/c nos. 2669 and 16667. These accounts pertain to Sree Bhakta Markandeshwara Minerals (SBMM) and Sri Lakshmi
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Venkateshwara Minerals respectively. The rest of the money has been paid through cash. The amount so paid as been routed through circuitous routes. Since the amount is paid for having given protection for illegal mining activities. It should be recovered by the following the provisions of Law and forfeited to State Government. Contemplated action should also be initiated against “Sri G.J. Reddy Sir” under the various provisions of Law.
(11) There were many firms/ companies/ individuals who were transporting the illegal iron ore to Belekeri Port as listed in Table-5 of Chapter-28. It is cross-verified and found that they were involved in paying the risk amount to Sri K. Mahesh and his associates. Some of their names are also figured in the table of trading amount. Action should be initiated against them.
(12) From the seized records many accounts details were found. These accounts were verified with the concerned banks and Income Tax Department. There are about 60 bank accounts connected with the iron ore trading operated by Sri K. Mahesh and his associates. On verification of the transactions in these accounts it is noted that there is close linkages between the illegal mining and transactions. Most of these accounts are opened in the 2008-09 and also 2009-10. The movement of money was varying during 2009-10 when the illegal mining activities were at peak. Further investigation is required in this matter.
(13) From the seized records it is noted that there were hundreds of peoples were engaged by Sri K. Mahesh
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and his associates. The names are given table (11). This list is not exhaustive. There may be many more names. These names would be helpful in further investigation.
(14) It is observed from the records that there was heavy moment of vehicles from one plot to other and leases to plots without having any permit. The list of such movement is given in table (12) and Annexures 1a, 1b, 1c and 1d of Chapter-28. This indicate the quantum of illegalities and un-control movements. Since heavy bribes were paid to all concerned there was hardly any check on the movement of vehicle which was carrying illegal iron ore. Further investigation in this part may reveal the facts.
(15) The seized record of Income Tax Department pertaining to Sri Madhukumar Varma (MKV) indicates payments made to various persons for various purposes. Since a partnership firm M/s Madhushree Enterprises is managed by him involved in illegal mining in Bellary district a further investigation is required in this matter.
(16) It is observed from the seized records that hawala money is paid. Though the quantum of money is quite less, but it indicates the prevailing of hawala transactions in illegal mining. This requires further investigation.
42) The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in
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some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
43) Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
44) The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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29
MISCELLANEOUS
Chapter-29 of Dr. U.V. Singh’s Report refers to export of Waste Dump from Mysore Minerals Limited, Misuse of permits in the name of Transportation of Waste Dumps, Irregularities in fixing the boundary of the Leases and Mining Lease of Sri Kanaiahlal Dhuderia. All these headings are separately dealt as stated below.
A.EXPORT OF WASTE DUMP FROM MYSORE MINERALS LTD
M/s. Mysore Minerals Limited (MML) is a Government of Karnataka undertaking. It has many object to exploit the available mineral resources in various region of this State. For this purpose, it is engaged in exploration, exploitation and marketing of various minerals in the State of Karnataka. At present, MML has 40 Mining Leases covering an area of 5377.83 hectares and 38 quarry leases, covering an area of 294.30 acres for the purpose of mining various minerals and granite, etc.
1) Dr. U.V. Singh, in his report at Table-1 of Chapter 29 has pointed out that during the year 2008-09 to 2009-10, it has produced 33,46,522.3 MTs and sold equal amount of iron ore. MML is having 4 iron ore mines in Bellary District. Out of the them, one in Thimmappanagudi is being operated as joint venture with JSW. The Joint venture is named as Vijayanagar Minerals Private Limited. All the mines running under contracts are given to various private companies. The MML started selling waste dumps from the mines. The maximum waste dumps has been sold between 2003 to 2011. The MML has submitted list of firms/companies/individuals to which waste dumps was sold as on 31/7/2006. As per the list there are about 90 companies/ firms/individuals to whom the waste dump is sold. The particulars of those companies and the quantity sold are
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shown in table-2 of Dr. U.V.Singh’s report, according to which totally 3334035.18 MTs of waste dump has been sold by the company till the year 2006.
2) The report of Dr. U.V. Singh also shows that the MML has sold approximately 28,48,220 MTs of iron ore as waste dump between 1/8/2005 and 31/1/2011. Out of this, 9,52,802 MTs was sold for export and remaining 18,95,418 MTs used for domestic consumption. Most of the waste dumps exported was directly sent to the ports and in some cases through stockyards.
3) During the course of investigation, Dr. U.V. Singh has noticed that out of 90 purchasers, only 13 purchasers were actually trading of waste dump and the rest of the purchasers were either dummy or the purchase was done on proxy. The particulars of various such purchasers are shown in the report of Dr. U.V. Singh. Dr. U.V. Singh also notes in his report that, the General Manager (Production), Iron ore Sector, Sandur of MML has given the above particulars. Dr.U.V. Singh notes that 50,000 MTs of Waste dump was sold to M/s. Bava Mines and Minerals, Mangalore as per Sale deed award No.826 dated 19/8/2008 for 3,05,00,000/-. The money was paid through DDs by M/s. Sathya Granites. Part of the waste dump quantity was lifted and for the lift out dumps, money was paid to M/s. Sathya Granites. Dr. U.V. Singh also notes that there are plenty of cases of this kind and such proxy purchasers were going with the full knowledge of the concerned officers in MML.
4) Dr. U.V. Singh also has stated that many cases of undue favours of the allotment of waste dump to certain persons have come to light and that the price fixed for such sale was also as low as 25/- per MT. He also notes that in many
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cases dumps sold had been 53.02 to 55.95 Fe content and in his opinion the same cannot be classified as waste dumps. It is stated that large quantity of waste dump are not lifted by the purchasers, but transit permits were issued to the whole quantity and transit permits which were not used for lifting sold dumps, were not surrendered back to the Department. This waste dumps were sold to other traders to use these permits to transport the illegal iron ore from different sources. It is also seen in some cases, offences were booked, but they were all compounded for meager penalty. Dr. U.V.Singh has secured the list of unused trip sheets for quantity of 2.10 Lakhs MTs from the above said General Manager. But there is no records to show what happened to those quantity of iron ore. (waste dumps).
5) There are also instances of money being refunded when the buyers did not lift the waste dump. But what happened to the quantity of non-transported dump is also not known. No inventory has been made of such waste dump. The presence of unused trip sheets raised various questions of misuse of these trip sheets. Table 3 of Dr.U.V. Singh’s report gives particulars of iron ore allotted, transported and balance quantity and balance amount, as per HO issued to DO’s, which comes to 10,69,58,042 MTs.
6) From the above material, it is clear that the officials of MML have knowingly committed irregularities and illegalities. Therefore, necessary action should be initiated against the officers, who should be identified and dealt in accordance with law after conducting proper investigation.
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B. MISUSE OF PERMITS IN THE NAME OF TRANSPORTATION OF WASTE DUMPS
(1) The Report of Dr. U.V. Singh’s Team in respect of Misuse of permits in the name of Transportation of Waste Dumps states the Iron ore extraction from a mine generates substantial quantity of waste material. This waste material comprises low grade iron ore of low Fe content and is not found suitable for direct use in large steel plants or in exports. This waste material is dumped at designated spots within the lease area called waste dump waste sites.
(2) The waste material is used for reclamation of mined areas. It is also supplied to sponge iron units or to authorised beneficiation plants where the Fe content of the ore is enhanced through a cleaning process or to pelletisation plants where the waste material is converted into pellets for use in sponge iron factories.
(3) It is further stated in the Report that the transportation of waste dump material requires permits as is the case in iron ore. It is learnt that accounting of waste dumps generated for each lease area is not done properly. The quantity of waste dump generated must have a correlation with the quantity of iron ore extracted from a mine. It is found that there are many wrong practices in the disposal of waste dumps.
(4) The investigation team also found that many dubious individuals buy waste material through their open auctions and use the permits obtained against waste dumps for transporting illicitly mined high grade ore. Moreover, there
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have been instances where permits have been used for transporting waste dumps to ports for export directly. This is an unusual phenomenon and required further investigation.
(5) Table -1 of Dr. U.V. Singh’s Report under the above heading shows the quantity of waste dump material (MT) for which permits were issued in favour of MML for transportation of waste dumps to ports for exports and domestic destinations. The Investigating team while examining the permits issued by Deputy Director, Mines, Hospet and others found that permits were issued to transport waste dumps directly to ports. It is noted that waste dump cannot be exported. In such circumstances either the permits issued for waste dump is used for transportation of iron ore from the same mine or from the unknown source. In both the cases there is misuse of permits. Table 2 of Dr. U.V. Singh’s Report shows the permits issued for Waste Dumps for Ports during the years 2006-07 to 2010. Action should be taken against all the Lessees and Vendors by recovering the market value during the time with exemplary penalty and penal actions.
C. IRREGULARITIES IN FIXING THE BOUNDARY OF THE LEASES
(1) In his Report in regard to irregularities in fixing the Boundary of the Leases, Dr. Singh reported that during the joint Survey conducted in the year 2007-08 and the Survey that is being done by the Central Empowerment Committee in Bellary District, pursuant to the directions of the Hon’ble Supreme Court of India, it is noted that there are high irregularities in demarcation of leased boundaries at
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ground. One such serious case observed pertains to Sri H.G. Ranganagowda, M.L. No.2549. In the said demarcation, the lease boundary has been shifted Southward direction to cover better deposition. The demarcation has been done by Sri T Darappa Naik, Second Division Surveyor of the office of the Deputy Conservator of Forests, Bellary. There are many more cases of this kind. Hence it is opined that the Principal Chief Conservator of Forests should be requested to identify all other such cases to take action against him. He also notes that the Engineer cum Surveyor Sri Basavaraj of the office of the Deputy Director of Mines and Geology, Hospet is also responsible for doing wrong survey and demarcation for the large number of mining leases. Hence, it is recommended disciplinary action should be taken against him also.
(2) The recommendations made by Dr. U.V. Singh is accepted and I recommend that Disciplinary action against Sri T. Darappa Naik, Second Division Surveyor of the office of the Deputy Director of Mines and Geology, Bellary and Sri Basavaraj, Engineer-cum-Surveyor, office of the Deputy Director of Mines and Geology, Hospet be taken. Further, it is recommended that the Department of Forest to identify all the other illegalities in fixing the boundary of leases and appropriate action be taken.
D. MINING LEASE NO. 2563 OF SRI KANHAIYALAL DUDHERIA
(1) In the Mining Lease No. 1672 granted to Sri Kanhaiyalal Dudheria, Dr. U.V. Singh Reports that during his investigation it is noticed that the lessee had proposed to grant mining lease to an extent of 56 Acres. The note sheets
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of the file of the office of Director, Mines and Geology, Bangalore indicates that there is a change in the extent from 56 Acres to 76 Acres. This change has happened during the processing of file either with the connivance or oversight in the office of the Director, Mines and Geology and Secretary, Mines. When and where exactly the change did take place from 56 Acres to 76 Acres can only be found out through a enquiry. Dr.U.V. Singh, pleaded his inability to complete the enquiry due to time constraint
Therefore, Dr. U.V. Singh recommended a thorough enquiry in the matter to be taken up by the Government.
The above recommendations made by Dr.U.V. Singh and team is accepted and recommended for implementation by the Government and other Competent Authorities. Further, in this Chapter, wherever the names of the officers are stated and in some instances, designation of the officers are stated, it is recommended to the State Government to initiate action against such officer/officials under the Prevention of Corruption Act, 1988 or under the relevant Disciplinary Rules.
Action should also be taken against all those who are involved in the illegal mining under the relevant provisions of Law, with recovery of losses to the State Government and penal actions should also be resorted to, wherever necessary.
The suggestions and recommendations made by Dr.U.V.Singh and team should be implemented to check further illegalities and irregularities in illegal export.
The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or
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proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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30
INFORMATION & COMMUNICATION TECHNOLOGY (ICT) BASED SOLUTION FOR ISSUING & TRACKING OF PERMITS FROM SOURCE TO DESTINATION AND OTHER SUGGESTIONS
Having personally experienced, one of the major causes of illegal transportation and noticing the weakness of the current system of granting transport permits, Dr. U.V. Singh’s team has recommended the following measures to be taken. I accept and in turn recommend to the Government to consider the feasibility of recommendations, in view of the huge loss that is caused to the State.
1) Regarding issue of permits:
(1) The bulk permits are issued in the Deputy Director of Mines and Geology’s office and trip sheets are given in bulk to the lessee for issuance at his end. As there is no infrastructure at these offices, the permits and the trip sheets are many a time printed in the market which is major source of manipulation, forgery and misuse. This should be stopped immediately. Each trip sheet permits a uniform weight of 16 MT to be carried in each truck load, however in reality the trucks carry iron ore much beyond this 16 MT permitted as per the trip sheet. Thus there is no link between the weights shown in the trip sheet. It is learnt that new trip sheets are issued for actual weight subject to the restrictions under the Motor Vehicles Act.
(2) The permit database of Director of Mines and Geology through which the bulk permits are issued is not shared with other mining related departments like forest, customs, railways, etc. The said database does not talk to the databases of other departments which are involved in exports of iron ore like customs. Departments like Forests do not have
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electronic systems and the forest transit (Form 27) permits are issued manually, which are misused.
(3) Use of forged/Fake permits: Being paper documents, the permits can be forged easily, hundreds of such cases were found during this investigation. There is no mechanism to independently verify permits produced at inspection points from the central database of permits. This has resulted in ineffective checking system and major corrupt practices.
2) Monitoring of the transportation of iron ore enroute:
(1) The present system of monitoring the transportation relies largely on the check posts, which are manned by personnel of Forests, Mines and Geology, Transport, Revenue and Police, etc.
(2) The Check posts in the present form are not effective because of the following reasons:
(i) Highly inadequate unskilled staff varying from 3 – 4 personnel per check post. The manpower of traders are employed unofficially at check posts. Touts are placed to collect the money. Kallahalli bypass check post was one such example.
(ii) Since the number of iron ore laden trucks passing through the check posts is very high, any manual checking process would lead to immense logistic problems of traffic jamming, space for storing the illicit material seized, space for parking the seized trucks, etc.
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(iii) The check posts do not have facilities like weigh bridges, automated process using IT infrastructure etc to check the cases of overloading in case of any suspicion.
(iv) The follow up process in the event of detection of illicit transportation is very cumbersome and weak.
(v) There is a total lack of staff at supervisory level.
(vi) Posting of officials at check posts is a very prized one. There is competition and sometimes postings are directly by passing the regular transfer process.
3) Monitoring the stockyard operations:
The stockyards are the major source of illegal mining activities. Monitoring of stockyards suffers from the following drawbacks.
(1) There is no system in place to map the material in the stockyard to the sourced lease and others. Because of this, there is ample scope for illicit material being stocked. There is no system to prevent and check sharing of one stockyard by multiple traders. Stockyards at P.K.Halli, Sathya Granites and others are some examples in this regard.
(2) There are a number of stockyards that are geographically distributed, hence implementing monitoring mechanisms in the present system is a challenge. The formulation of Rules framed now, to allow stockyards in the
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name of “benefication” would be a major blow to check irregularities in future.
(3) No tracking and regulation of trade in iron ore among traders operating in between the source (i.e. Lessee and the end users (e.g., Exporters/ Steel Plants, etc). Trade in iron ore among intermediate traders generally happens at the stockyards. As the stockyards are not under a strict supervision, the traders and their trading activities are not being monitored effectively.
4) Verification regarding the genuineness of the material at the sink points i.e., ports, railway sidings, steel plants, etc.
(1) Presently, there is no system in place at any of the sink points i.e., at ports, railway sidings, Steel Plants, etc where a process of verification regarding the legitimacy of the iron ore received is carried out. Mining laws are also silent in this regard. Under rule 162 of the Karnataka Forests Act, 1969, there is a provision with regard to Transport of Forest produce by sea or rail. The Rule is reproduced below:-
“162. Transport of forest produce by sea or rail – No forest produce shall be book for transport by rail or sea unless the same is covered by valid pass or way permit. The booking authority shall affix its seal and note the number and date of the railway receipt or shipping bill, as the case may be, on the pass or way permit and cancel it. The booking authority shall also note the number and date of way permit in the railway receipt or shipping bill, as the case may be, and shall report to the nearest police or forest
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authorities about forest produce not covered by a valid pass or way – permit and brought for booking.”
(2) It is to be noted that iron ore extracted from leases in forest area are forest produce as per Sec. 2 of the Karnataka Forest Act, 1963. Though Rule 162 provides checking of legitimacy or iron ore by railway port and custom authorities, it is not being implemented.
(3) In the light of the above, there is ample scope for the miscreants to illicitly mine, transport and export the iron ore as has happened.
(4) After understanding the present processes involved in the export of iron ore, the roles of various departments, it is observed that the regulations including issue of permits, etc and monitoring of the material transported from source (i.e. mine head) to sink (i.e. ports) cannot be effective through manual systems. Therefore, keeping in view the magnitude of the scale of operations involved in iron ore exports, the present system has to be replaced by an Information Communication and Technology (ICT) based system.
5) Objectives of the proposed system:
(1) To ensure effective tracking of each iron ore consignment from source i.e., lease/stockyard to destination which can either be ports, stockyards or domestic consumers like steel and sponge iron plants, etc.
(2) To monitor delivery of each consignment of iron ore at the destination through a mechanism of acknowledgement through electronic handshake between source and destination.
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(3) To prevent overloading of vehicles by streamlining process of issue of permits and trip sheets and ensuring that trip sheets reflect the actual quantity transported through the vehicle.
(4) To prevent use of forged/fake permits by migrating from paper based permits to secure database based permit system which is totally transparent and available in public domain. Placing the permits in public domain would ensure that the permit issuing process is fair and transparent.
(5) To ensure that the end user is aware of the source of iron ore and genuineness of the permits by creation of a central database that is updated in real time, is online and available to other controlling departments like Forest, Customs, Police, Revenue, Ports, etc and other domestic users.
(6) To track sale or purchase transactions in iron ore, starting from the source to the destination. This would help in bringing about transparency in trade carried out by various traders/ middlemen with regard to iron ore.
(7) To reduce dependence on day to day manual monitoring and implement an integrated system that shall centrally monitor the day to day round the clock movements and shall be scalable to cater to large scale operations.
6) I.T. Based “To be” Process The I.T based “To be” process is outlined herewith for future implementation. This would help in mapping each consignment from lease to final user through various traders
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using a unique I.D generated at the time of weighing at the pit head.
A. Lease:
(a) A lessee desirous of transporting iron ore to a destination, in the name of a party, shall raise an electronic request to the concerned Deputy Director of Mines and Geology Department. The lessee shall update the sale particulars in the system viz., quantity, grade, name of buyer (the party), TIN number of the buyer, sale invoice copy, etc. The buyer shall acknowledge the same.
(b) The processing of the application shall be strictly on the basis of First in First out (FIFO).
(c) On receipt of the application, the Deputy Director of Mines and Geology shall acknowledge the receipt and assign the application to the concerned geologist for field inspection. There shall be designated geologist for each mine. Duplication shall be completely avoided.
(d) The geologist shall conduct a field inspection and submit his report electronically will full details of stacks.
(e) On receipt of the report of the geologist and subject to the fulfillment of legal compliances and payment of royalty, etc., the Deputy Director of Mines and Geology shall generate a digitally signed Mineral Dispatch Permit (MDP) or Bulk permit document in an electronic form. MDPs are issued for a fixed quantity for a particular party and destination. The quantity mentioned in the MDP has to be transported within prescribed
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time from the date of the MDP. The MDP shall also mention mode of transport and designation wise permitted trip time. This would be utilized to set the cutoff date for issue of trip sheets.
(f) Information of issued permits shall be available to all the mining related departments/ offices from the central data base.
(g) Each of the concerned department shall have a login in the central database through which they would be able to view the MDPs and generate reports. For example, DCF, Bellary would be able to view all the MDPs issued by the Deputy Director of Mines and Geology and after due verification shall be able to generate Office Memorandum for issue of transit permits against the MDP, as a digitally signed electronic document, from the central server after checking and following procedures. Cumbersome processes should be simplified, if needed, through amendments in the existing Rules.
(h) Each of the lessees shall install a weigh bridge at the mine exit point. The weigh bridge shall be integrated with the central application and have real time connectivity to the central server. Each vehicle existing in a mine with a load of iron ore shall be weighed at the weigh bridge at exit point and the weight of the load shall be recorded in the central server and adjusted against the MDPs quantity. There shall be no scope of by passing this process by the vehicle.
(i) At the time of weighing, the vehicle particulars like vehicle registration number, transporter’s name, etc shall be captured into the system. The weight of material, date and time of weighing shall be automatically captured.
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(j) A trip sheet with a unique ID number shall be generated for each vehicle for destinations fed in the central database. In case the Lease area is located within a Forest, the Forest Transit permit shall be generated along with Trip sheet. The generated Forest Transit Permit shall be available to the Forest Department from the central database for cross check and verification. The Forest Way Permits shall also be available to the Deputy Director of Mines and Geology from the Central Server. The lessee shall take a print out of the trip sheet, which would be carried by the vehicle. The system would ensure that no trip sheet is issued for materials in excess of the MDP quantity.
(k) The Unique I.D number generated at the time of printing of permit shall be used to track the movement of the iron ore load being carried in the vehicle.
B. Stock Yard.
(a) Stockyards shall be equipped with weigh bridges at entry and exit points. The weigh bridges shall be integrated and networked with central application and database as in the case of leases.
(b) Details of a truck entering a stockyard shall be electronically marked in the online database and the trip sheet against the truck shall be electronically cancelled. This practice would provide a real time assessment of quantity permitted for transport from a lease to a stock yard, the quantity actually supplied to the stockyard, the quantity in transit and the quantity yet to be transported. It would also be possible to have an online real time stock position report in the stockyard.
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(c) Transport of ore from the stockyard to other destinations shall be carried out by following a process similar to the one followed at Leases except that stock with source shall be made known at the time of issue of MDP.
However, as far as possible, stockyards shall be avoided.
C. Check post:
(a) Integrated Check post shall be established at strategic locations to track the movement of the iron ore vehicles. The cheek posts shall be networked with the central database. This would help in easy verification of permits/trip sheets with the online database.
(b) Regulatory authorities shall also be able to verify the genuineness of the permits/trip sheets by querying the central database through mobile devices/phones, etc.
(c) The integrated check post shall be equipped with weigh bridges for intensive verification of selected vehicles in order to ensure loaded quantity is in accordance with the quantity mentioned in trip sheets and others.
(d) Checking of the permits at check posts could be automated by equipping trucks with RFID devises or using video cameras for capturing vehicle registration numbers and use the inputs from these devices to query the central database in real time. With these query inputs the entire permits details along with source information shall be available to the concerned.
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D. Trading of Iron ore among intermediate traders.
(a) Intermediate Traders shall register in the centralized system just as other stakeholders like lessees, stockyard owners and Domestic Users. Any sale or purchase between two entities (which may be a lessee/stockyard owner/trader/exporter/ domestic consumer shall be captured in the system. The seller of the material shall post the particulars of buyer, material quantity, date of sale transaction, sale invoice copy and other source of material (Permit/Trip sheet numbers through which the material has come in the possession of the seller in the system. The buyer shall acknowledge the transaction particulars posted by the seller. This system would capture each sale transaction of iron ore and should be linked to the server of commercial tax department for checking for VAT evasion, etc.
(b) At the time of application for issue of MDP from stockyard to party, the stockyard owner shall submit the particulars of owner of the material at the time of receipt of the material at the stockyard and the particulars of the party on whose name the material has to be transported.
(c) As the material might have changed many hands while still being in the stockyard, each change of hand would be updated in the system to obtain a full chain of transactions, right from the owner, at the time of material receipt in the stockyard, to the party in whose name the material would be ultimately transported. This would ensure the original source of the material is known in each step of trade and transit.
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(d) Any sale transaction between a buyer and seller of iron ore shall mention the permit/trip sheet numbers against which the transaction has taking place.
E. Destinations:-
(1) Port: Online access to the database of permits issued to different parties with port as destination shall be available to the port authority and Customs Department. The port shall have a mechanism to electronically cancel the permit/ trip sheets at the time of physical entry of the iron ore in the port. This would ensure no illicit material is received at the port and exported out of the country. This would also ensure proper accounting of the material at the port and help determine the actual source of each export shipment.
(2) Customs : An exporter shall provide permit/trip sheet details at the time of preparation of shipping bill to the custom authority. The custom authority shall log into the centre database and after verification, “mark” the permit/trip sheets against which the shipping bill is prepared and record shipping bill numbers against the permit/trip sheet numbers. This would ensure no further shipping bills are prepared against those permit/trip sheets.
(3) Transport through Goods train: In case of transportation of iron ore through a goods train during a part of the journey, the permit/trip sheets shall mention the final destination along with the railway siding. E.g. For transport of iron ore to Chennai through rail, the permit shall mention the destination as XXX railway siding to Chennai. However, the permitted time for transporting material from the source (Lease/ stockyard) to the railway siding shall be mentioned separately in the permits/trip sheets. Upon receipt of the material at the
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railway siding, the railway authority shall acknowledge receipt by marking the permit/trip sheets in the central database. Similarly, at the time of release of material at the terminating station of goods train, the railway authority shall again mark the permits/trip sheets. This would help to account the material in the railway siding in real time.
The material would be received at the port from the terminating station of goods train through the trucks. On receipt of the same the port authorities shall mark the quantity received against the permits/trip sheets quantity in the name of the party. The Railways should maintain the inventory of iron ore at any point of time.
F. Other Domestic Consumers
(1) All domestic consumers or iron ore shall register in the system. At the time of receipt of material in the premises, they shall mark the permit/trip sheets in the central database. This would help in proper accounting of the material used by the domestic consumers and prevent misuse of permits.
(2) It is anticipated that this system would help curb illegalities in transport of illicit iron ore to a large extent by provident an effective monitoring mechanism. The system would have to be periodically audited and certified by third parties to help ensure it meets stated objectives.
OTHER SUGGESTIONS
An effective control and regulation over mining activities can be enabled through use of Information and Communication Technology (IC&T) tools. This has been discussed in earlier in this chapter.
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As part of this enquiry and during visits to the field, discussions were held with officials of various departments. Some other important issues that emerged out of these discussions and which require policy, legal and administrative changes are discussed below:
1. Legal Provisions The current provisions of Karnataka Forest Act do not have enough deterrence to dissuade miscreants from committing offences with regard to illicit extraction and transportation of iron ore from forest areas. Since most of the areas rich in iron ore, including the iron ore leases, fall in forest area, following amendments are suggested in the Karnataka Forest Act, 1963:
(1) Offences related to illicit extraction, transportation of iron ore from forest areas are treated as non-cognizable and bailable offences under Karnataka Forest Act, 1963. It is suggested that these offences are brought under the cognizable and non-bailable category.
(2) The offence of encroachments in forest area for the purpose of mining is suggested to be made a cognizable and non bailable category.
(3) Section 71 (A) of Karnataka Forest Act 1963 provides for confiscation of tools, vehicles etc, used for committing certain category of forest offences. It is suggested that this section is amended to include provision for confiscation of vehicles, tools etc used in the offence of illicit extraction and transportation of minerals from forest areas.
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(4) In cases of serious offences committed by the lessees of iron ore leases in forest land, action should be taken under Section 82 of Karnataka Forest Act for forfeiture of the lease as a rule than exception, in order to ensure strict control over illicit activities in the leased area.
2. Regulation of Stockyards
Stockyards are storage depots of iron ore. Iron ore extracted from the mine is stocked at these storage points before its transport to steel plants, sponge iron plants or ports. These stockyards are generally operated by the lease owners. However many stockyards are owned and operated by middlemen / traders of iron ore who are neither lessees, exporters or own steel/sponge iron plants. The stockyards owned by iron ore traders receive their material from many mines and no system exists to differentiate material from one mine to the other. Due to the bulk nature of the material it is also difficult to differentiate material procured legally and material procured illicitly. Hence in the absence of regulatory controls, stockyards have become hub of illicit materials.
In view of the above, following are some of suggestions which would help in better regulations of the stock yards:
(1) Establishment of Stockyards should be permitted for lessees only. Rule 4 of Prevention of Karnataka (Illegal Mining Transportation and Storage of Minerals) Rules, 2011 should be modified accordingly.
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(2) Stockyards for lessees, to be used for storage or carrying beneficiation, should be as far as possible confined to within the lease boundary as envisaged in the approved mining plans. It is only in exceptional circumstances, establishment of stockyards may be permitted outside the leased area at a location which is very close the lease area.
3. Suggestions with regard to issue of Mineral Dispatch Permits (MDP)
Following modifications are suggested regarding issue of Mineral Dispatch Permits (MDP) in order to control of misuse of permits:
(1) Permits should be issued for the stockyards of the lessees and end consumers premises only and not for intermediate destinations.
(2) Permits should not be issued from one leased area to other leased area.
(3) Permits should not be reissued with change in destination and/or party and/or vehicle. Rather fresh permits should be issued in case a change in destination, party etc. is requested.
4. Surface Mining/Digging for iron ore
The practice of surface mining/digging for iron ore extraction should be banned. Breaking of surface and mining of ore through the method of surface mining/digging should be made a non-cognizable offence.
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5. Landscape approach in allotment of Mining Leases in Forest Blocks
Allotment of mining leases in a forest block should be on a landscape approach with a master plan for the entire landscape. The block should be divided into grids with Go and No-Go areas. The no go areas are to be free from any mining activity and treated as the nuclei of conservation strategy.
I agree with the conclusions arrived at and recommend to the Government the recommendations made herein above, shall be complied with.
The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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31
GRANT OF MINING LEASES UNDER MMRD ACT
(1) The State of Karnataka is gifted by nature to have good natural resources to support the existing life system. Minerals are the non-renewable natural resource. After extraction and consumption the minerals are finally lost. Iron ore is one of the mineral available in Karnataka in two forms i.e. Magnetite and Hematite. These two minerals are distinctly located in the State. Over exploitation of iron ore would result in irreversible damages, which will have adverse impact on the development and human life as a whole.
(2) Domestic consumption of iron ore for the last four years is almost constant. It comes out approximately 22 Million Tons to 25 Million Tons including consumption by the neighbouring States. In addition, there is large scale illegal trading of Iron ore.
(3) Since 2002 onwards due to “China boom” there is a tremendous pressure on the grant of mining leases in the State particularly for iron ore. There is also political compulsion to grant the mining leases. During the investigation, it is noted that there are several allegations of various kinds made while granting the leases. Such allegation appears frequently in the electronic media, as well as, in print media. With the above background, the following information is provided.
(4) During the last seven years several mining leases were granted/ renewed. The details are as under: Sl. Period No. of Mining leases No. granted /recommended 1 Jan 2001 to Aug 2004 15 2 28-05-2004 to 04-02-2006 42
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3 02-02-2006 to 09-10-2007 44 4 09-10-2007 to 28-05-2008 22 5 June 2008 to till date 21 + 40 Total 134
The above said figures are provided by the Department of Mines, Bangalore. The list is enclosed for ready reference at Annexure-1 to the Chapter-31 of Dr. U.V. Singh’s Report.
(5) It is to state that the grant of mining leases in the State are on higher side and the tolerance capacity of the area is already overstepped. Hence there should be complete moratorium on grant or to renew the mining leases of iron ore.
I suggest that, in view of the fact that Report of Dr. U.V. Singh in the above subject of grant of mining lease under MM RD Act shows uncontrolled exploitation of iron ore would have a far reaching consequences on natural resources of the State, the concerned Governments should take note of all these and take suitable action to have a sustainable policy, at the earliest.
The above recommendations are made under Sec. 12(3) of the Karnataka Lokayukta Act, 1984. The action taken or proposed to be taken on these recommendations be intimated to this authority, as required under Sec. 12(4) of the Karnataka Lokayukta Act, 1984.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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32 SECURITY FOR THE OFFICERS WHO HAVE WORKED IN THE LOKAYUKTA TEAM WHILE PREPARING THIS REPORT In preparing this report maximum efforts were put by Dr. U.V.Singh, IFS, Chief Conservator of Forests, Lake Development Authority, Bangalore as the Leader of the investigating team he is assisted by: (1) Sri. Bishwajit Mishra, IFS, Deputy Conservator of Forests, Bannerghatta National Park, Bangalore (2) Sri Vipin Singh, IFS, Deputy Conservator of Forests and Project Director, Karnataka State Wide Area Network (KSWAB), E-Governance, DPAR, Bangalore (3) Sri K. Udaykumar, Deputy Conservator of Forests, Lake Development Authority, Bangalore and (4) Sri Takhat Singh Ranawat, IFS, ACF and Officer on Special Duty, Karwar. I Place on record my deep appreciation for the work done by the above mentioned team of Dr. U.V.Singh in gathering and preparing material for completing this report. This job was done by them meticulously and fearlessly. Because of their hard work put in even beyond the official time, I am able to finalise this report but for this cooperation it would not have been possible. They have visited many mining sites where illegal minings were going on, to the annoyance of the owners of such mines and have made many enemies of the process. They have also visited various ports both on East and West side in India to get information about illegal stocking exporting of Iron ore was going on. They have also obtained the particulars of quantity of iron ore illegally extracted, transported and exported, they have gathered the particulars of such exporters. Their services are invaluable in preparing this report and their investigation has led to the discovery of a new system in mining called “Zero risk transportation”. During the course of their investigation, these officers have downloaded from the computers of various people who were indulging in illegal activities and from the entries made
Report Page 462 (A) of 464 therein these officers were able to identify and name various persons including government persons who are involved in illegal mining activities. By this process they have retrieved sufficient documentary evidence as to where exactly the money has transferred. They have also collated information given by Income Tax Department, Banks etc., and have collated the same with the information already collected by them. Thus they are succeeded in identifying in the persons who are beneficiaries of the illegal mining.
In the above process they have identified very many officers including their own superior officers, Police officers, officers of Mines Department, Transport Department, powerful politicians and powerful people in the mining business. Hence it is my boundant duty to bring it to the notice of the government that there is every likelihood of these people trying to harm these officers, both physically and professionally.
This fear of mine is not unfounded. Dr. U.V.Singh who heads the team of these officers was a victim of physically attack once before while discharging his official duties. His conversation with an MLA from Bellary, which is a part of this report in different chapter, gives a sufficient room to apprehend that he is likely to be physically harmed as well as professionally. In this background, I request the government to make a proper assessment of the threat security to these officers and provide sufficient security and I also request the Government to bear in mind in view of the facts mentioned herein above, these officers are likely to be victimised professionally. Hence this report. Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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33 ACKNOWLEDGEMENT
In this report, myself and my team have tried to look into irregularities, illegalities and problems in mining activities with specific reference to the Transportation and exportation of illegal mineral and consequential loss caused to the State Exchequer.
In this effort of ours, in my opinion, we have succeeded substantially in identifying the illegalities and irregularities, as also, persons responsible for the same. The effort has been as a team and all members of the team have worked with dedication and devotion. There were moments when we got a failure, but in the end, I think we have overcome that. I am grateful to Sri
K.R. Chamayya, Retired Secretary, Law Department,
Government of Karnataka, who was my principal advisor. The
Registrar of this Institution Sri Moosa Kunhi Nayar Moole has contributed much in this endeavour of ours, without compromising with his other duties. Tremendous work put both in the field and office by Dr. U.V.Singh, IFS, Chief Conservator of Forests; Sri Bishwajit Mishra, IFS, Deputy Conservator of
Forests; Sri Vipin Singh, IFS, Deputy Conservator of Forests; Sri
Uday Kumar, Deputy Conservator of Forests and Sri Takhat
Singh Ranawat, IFS, ACF & Officer on Special Duty, Karwar, without whose hard work this Report would not have seen the light of the day. To all these persons, I am deeply indebted. I also place my appreciation of work of Smt. Jayashree, Gazetted
Assistant; Smt. V. Latha, Senior Judgment Writer; Smt. K.
Chandrakala, Senior Judgment Writer; Sri K.Krishnan, Senior
Judgment Writer and Smt. M.Vasanthakumari, Judgment
Writer, without whose help this report could not have been
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completed. They all have worked overtime, without any extra remuneration. Further for all those people, whose names are not here, who have helped me in preparation of this Report, I am indebted.
Sd/- (N.SANTOSH HEGDE) LOKAYUKTA
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