Sasee Bhoosan Pattanayak S/O Late ... vs State Of Odisha Through Principal ... on 7 March, 2022

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National Green Tribunal

Sasee Bhoosan Pattanayak S/O Late ... vs State Of Odisha Through Principal ... on 7 March, 2022

1. Grievance in this application is against illegal extraction of soil/Morrum/earth and other minor minerals by - M/s Woodhill Hillways (JV) and M/s Hillways Construction Company Pvt. Ltd, contractors for executing work of Railways in connection with construction of Earth bed of Angul - Duburi-Sukinda Railway line, in the territory of Odisha State. The mining is being done without requisite EIA. The area is forest area and no clearance under the Forest (Conservation) Act, 1980 has been taken. Mining has been conducted without observing requisite safeguards.

2. The application was filed on 30.08.2017. The Tribunal issued notice on 22.09.2017. Respondents in the application include the State of Odisha and its officers, State PCB, SEIAA, MoEF, Railway Administration and the two companies (PP) who are said to have undertaken mining.

3. Replies have been filed by the contesting respondents. According to the affidavit of the State PCB, the quantity of mined material is 18,33,660 cubic meters. Reply of the Railways Administration is that EIA requirement does not apply to a Railway project. Judgement of this Tribunal dated 31.5.2016 in Vikrant Tongad (OA 478/2015) about EC for DMRC is pending consideration before the Hon'ble Supreme Court. It is further stated that quarrying operation for Railway Administration does not require any permit under the Mining Law in view of section 11 of the Railways Act, 1989. The Railway Administration has also annexed summary sheet of bill of quantities supplied to it. In respect of earth work, the quantity supplied is said to be 28,99,303 cum and the amount of bill is Rs. 33,32,74,879.8/-. The response of the Authorities in the State of Odisha is that royalty has been collected for mining amounting to Rs 3,02,41,811/- under the Mining Rules. The stand of the PPs is that the railway project is an important project and thus neither EIA nor Mining Rules apply.

4. The matter has been considered on several occasions earlier but we may only refer to the order dated 15.11.2021. The Tribunal held that mining has been done by the PPs illegally degrading the environment for which environmental compensation has to be recovered. Accordingly, the Tribunal directed the District Magistrate and the State PCB to take 2 further action in the matter and also clarify whether Forest Conservation Act, 1980 has been violated due to illegal mining.

5. Accordingly, affidavit dated 07.01.2022 has been filed by the State PCB and affidavit dated 11.01.2022 has been filed by the Collector, Dhenkanal. The stand of the State PCB is that compensation amount of Rs.47,60,000/- is liable to be paid for pollution caused as per methodology adopted by the CPCB which lays down a standard rate of per day pollution, multiplied by number of days for which such pollution took place. It is further mentioned that as per Notification dated 15.01.2016 issued by the MoEF&CC in view of judgement of the Hon'ble Supreme Court in Deepak kumar v. State of Haryana & Ors., (2012) 4 SCC 629, EC for mining is mandatory. Stand of the Collector is identical.

6. We have heard learned counsel for the appearing parties and perused the record. None appears for the PP though earlier Mr. Rajat Kumar Das, Advocate had been appearing, who is not appearing since last some dates though reply has been filed on their behalf. Thus, the PPs have to be proceeded against ex parte.

7. As regards the plea of exemption from EC or other laws for executing the work of the Railway Administration, we find no merit therein. Requirement of EC for DMRC or such other project of Railways not specified in EIA Notification dated 14.09.2006 stands on a different footing than mining which is covered by the said notification. Section 11 of the Railways Act, 1989 empowering the execution of railway works do not in any manner exempt the requirement of environmental laws. The EP Act, 1986 has over-riding effect on the subject of environment norms. Moreover, in view of judgement of Hon'ble Supreme Court in Deepak Kumar (Supra) such requirement is part of sustainable development 3 principle which is part of Article 21. Further, in the present case, the mining in question has been undertaken not by Railways but by private contractor for commercial purpose. Mined material has been supplied to Railway against payment.

8. Learned Counsel for the applicant submitted that mining is patently illegal in absence of EC. Mineral vests in the State and extraction without State's permission is illegal and infact amounts to theft. Compensation assessed does not take into account the value of the mined material, cost of restoration, extent of damage to the environment and deterrent element, as required under the law. It is submitted that mining is a hazardous activity resulting, inter-alia, in degradation of environment on account of excavation, transportation and adverse effect on ground water. In view of such adverse impact, environment impact assessment is mandatory so as to mitigate the impact in an appropriate manner. In the course of impact assessment, mining plan and restoration post mining are to be ensured. This having not been done the PP has to be held accountable by way of compensation for damage to the environment as well as loss of the assets of the State. Reliance has been placed inter alia on Goa Foundation v. Union of India & Ors (2014) 6 SCC 590and Common Cause v. Union of India & Ors (2017) 9 SCC 499.

9. Reliance has also been placed on certain orders of this Tribunal to which reference may be made. Vide order of this Tribunal dated 26.02.2021 in O.A No. 360/2015, NGT Bar Association v. Virender Singh (State of Gujarat) and other connected matters, it was observed:-

"Scale of compensation for violations on polluter pays principle

10. Vide order dated 17.08.2020, the Tribunal considered the CPCB report dated 30.01.2020, in pursuance of earlier orders 4 on scale of compensation to be recovered for violation of norms for mining on polluter pays principle and the matter was deferred for further consideration of such scale and further orders in the light of the EMGSM 2020. On the issue of scale of compensation for violations, the Tribunal held that the same has to be calculated having regard to the polluter pays principle and not mere loss of royalty. This requires taking into account value of the illegally mined material and cost of restoration of the environment. CPCB did the exercise by constituting an expert Committee. The Tribunal considered the report as follows:-

"8. The Committee considered two approaches: (I) Approach 1: Direct Compensation based on the market value of extraction, adjusted for ecological damages.

(II) Approach 2: Computing a Simplified NPV for ecological damages.

9. In the first approach, the criteria adopted is:

 Exceedance Factor (EF).

 Risk Factor (RF).

 Deterrence Factor (DF).

10. Approach 1 is demonstrated by Table 1 as follows:

" Table No. 01: Approach 1

Permitted Total Excess Exceedance in Compensation Charge Quantity Extractio Extraction Extraction: (in Rs.) (in MT or n (in MT (in MT or m3) m 3) or m3) X Y Z = Y-X Z/ X D * (1+RF + DF) Where D = Z x Market Value-of-

the-material-per-MT-or-m3 DF = 0.3 if Z/X = 0.11 to 0.40 DF = 0.6 if Z/X = 0.41 to 0.70 DF = 1 if Z/X >= 0.71 RF = 0.25, 0.50. 0.75, 1.00 (as per table 2) "

11. Approach 2 is demonstrated by following formula:

"Till such time as data and information for a comprehensive NPV is worked out in a site specific manner to account for all (or atleast the major) ecological damages, a simplified NPV, proxied on the market value of the illegally extracted amount may be computed. In this case the NPV approach would imply that the total benefits from the activity of sand mining (as represented by the market value of the extracted amount) be deducted from the 5 total ecological costs imposed by the activity.

In the absence of data on benefits and costs separately, we recommend a modification of the formula as shown below:

Total Benefits(B) = Market Value of illegal extraction : D (refer Table 1) Total Ecological Costs = Market Value Adjusted for risk factor: D ✱RF (refer Table1).

For present purposes, it is assumed that the Benefits would accrue only in the first year (in which the extraction of the illegally mined material takes place), while the ecological costs would continue to be felt over a period of time. NPV is to be calculated for a period of 5 years on the net value, Σ (C-B), at a discount rate ranging from 8%-5%, varying in inverse with the risk factor. Thus, where the highest risk factor (say 1) is applicable, the discount rate applicable would be the lowest (say 5% in this case)."

12. Final recommendation is as follows:

"Thus, it is recommended that the annual net present value (NPV) of the amount arrived at after taking the difference between the costs and the benefits through the use of the above approach, maybe calculated for a period of 5 years at a discount rate of 5% for mining which is in a severe ecological damage risk zone. The rationale for levying this NPV is based on expert opinion that reversal and/or restoration of the ecological damages is usually not possible within a short period of time and rarely is it feasible to achieve 100% restoration, even if the sand deposition in the river basin is restored through flooding in subsequent years. The negative externalities of the mining activity are therefore to be accounted for in this manner. Ideally, the worth of all such damages, including costs of those which can be restored should be charged. However, till data on site-specific assessments becomes available, this approach may be adopted in the interim. In situations where the risk categorization charged. However, till data on site-specific assessments becomes available, this approach may be adopted in the interim. In situations where the risk categorisation is unavailable or pending calculation, the following Discount Rates may be considered:


Severity        Mild    Moderate Significant     Severe
Risk Level       1         2          3            4
Risk Factor     0.25      0.50      0.75          1.0




                                                             6
                       Discount              8%           7%             6%           5%         "
                      Rate

11. Annexure-A appended to the report gives the calculation as follows:

"Compensation Charge (Scenario II - explicit accounting of NPV) Market Value of Illegally Mined Material (D) 5000*400 = 2000000/-

Annual Value of Foregone Ecological Values D*RF = 2000000/-

 Present Value of Foregone Ecological Values (@ 5% discount rate and over 5 years) (𝑫+𝑹𝑻) PV =∑𝟓𝒕=𝟏 (𝟏+𝒓)𝒕 = ∑(2000000) + (2000000) + (2000000) + (2000000)+ 2000000) (1+0.05)1 (1+0.05)2 (1+0.05)3 (1+0.05)4 (1+0.05)5 = Rs. 86,58,953/-

 Net Present Value (after netting out market value of illegally mined material) -

                 i.e., Total Compensation to be levied

                      =      NPV=PV-D
                      =      Rs. 66,58,953/-

             Compensation Charge in above case:

                   Approach 1
                   (no explicit accounting of NPV)       Approach 2
                                                         (explicit accounting of NPV)

                 D*(1+RF+DF)                             @ 5% discount rate and over 5 years
                 Rs. 46,00,000/-                         Rs. 66,58,953/-                                "

12. The Tribunal directed undertaking of scenario analysis, as suggested on behalf of the applicant and to furnish a further report accordingly. Further report dated 12.10.2020 has been filed by the CPCB reiterating its earlier report. We propose to approve approach-2 in the report. Apart from the above, a report dated 15.01.2021 has been filed by the Oversight Committee for the State of UP1 to which reference will be made later."

10. Vide order dated 24.12.2021 in O.A No. 54/2018/EZ, Bidu Bhusan Harichandan v. District Collector, Khurdha & Ors, it was observed:-

"6. Learned Counsel for the applicant submitted that there is large scale unregulated and unscientific illegal mining to the detriment of public revenue as well as environment and public health and those conducted mining are not being made 1 Constituted by this Tribunal to oversee compliance of environmental issues, on suggestions of the State Government.

accountable which is failure of rule of law. The mining has been conducted without any authority of owner - the Jagannath Temple Administration, Respondent No.4. In its affidavit in Para 5(iii), it is stated that Notice No. 2513, dated 08.03.2019 has been issued for auction of the said quarries which was duly published by the Sub-Collector, Khorda cum- Competent Authority of Shree Jagannath Temple administration. There is no clearance of environmental regulators, as stated by learned Counsel for SEIAA and State PCB. Still, no remedial action has been taken. Violation is of high magnitude. From the estimate of cost of restoration, which is said to be around ₹12 Crores, illegal mining may be of several crores. As per law laid down inter alia in Common Cause v. Union of India2 and as per Section 21 of the Mines and Minerals (Development and Regulation) Act, 1957, the entire value of the mined mineral has to be recovered from the person undertaking illegal mining, apart from environmental compensation for damage to the environment, on restoration principle with deterrent element, having regard to the financial capacity of the law violators. Action has also to be taken against the vehicles used in the process of transportation of illegally mined material by way of forfeiture. It appears that there is all round failure of the Administration in safeguarding the public revenue as well as protecting the environment. This calls for remedial action, including action against the erring Officers who may either be involved in collusion or negligence. Illegal mining is not only an offence under the Mines and Minerals Act but also under the Environment (Protection) Act, 1986, Air (Prevention & Control of Pollution) Act, 1981 and Water (Prevention & Control of Pollution) Act, 1974. Further, any person collecting proceeds of the crime under the said Acts automatically commits an offence under Section 3 of the Prevention of Money Laundering Act (PMLA), 2002. It is also an offence of theft under Indian Penal Code (IPC). Apart from statutory regulators, the Police Authorities as well as Enforcement Directorate (ED) have not taken any action in respect of such crimes."

11. In view of the above, we constitute a joint Committee of CPCB, State PCB, SEIAA Odisha and District Magistrate, Dhenkanal to revisit the calculation of compensation. The State PCB will be the nodal agency for coordination and compliance. However, on data available before this Tribunal, it is clear that value of mined material is more than Rs. 20 2(2017) 9 SCC 499 8 Crores. The royalty collected itself is more than Rs. 3 Crores, which is said to be 10% of the value of the mined material which is said to be more than 1800000 cum. Thus, minimum value of mined material can safely be taken to be Rs. 20 Crores.

12. Accordingly, pending final calculation of compensation amount as per norms laid down by the Hon'ble Supreme Court, after giving due opportunity to the PP, taking into account the value of the mined material, cost of the environmental services forgone forever, deterrent element and cost of restoration, interim compensation assessed at Rs. 20 Crore be deposited by the PP within two months with the State PCB. If deposit as directed is not made, the District Magistrate may recover the amount by using coercive measures. The Joint Committee may also prepare a restoration plan for utilizing the amount recovered, taking into account the District Environment Plan of the area. The execution may be through an appropriate agency which may be decided and overseen by the Committee.

13. The Joint Committee may report status of action taken as on July 31, 2022 with the Registrar of Kolkata Bench by August 16, 2022. If any further direction appears to be necessary, the Registrar may place the matter before the Bench.

Subject to above, the Application is disposed of. A copy of this order be forwarded to the CPCB, State PCB, SEIAA Odisha and District Magistrate, Dhenkanal by email for compliance.

Adarsh Kumar Goel, CP 9 Sudhir Agarwal, JM B. Amit Sthalekar, JM Saibal Dasgupta, EM Prof.A. Senthil Vel, EM March 07, 2022 Original Application No. 150/2017/EZ AB 10

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