M/S. Orissa Metaliks Private Ltd. And ... vs State Of Odisha & Others ...Opposite ... on 8 March, 2021

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Orissa High Court

M/S. Orissa Metaliks Private Ltd. And ... vs State Of Odisha & Others ...Opposite ... on 8 March, 2021

Equivalent citations: AIR 2021 ORISSA 85, AIRONLINE 2021 ORI 116

1. Heard Mr. Pinaki Misra, learned Senior Advocate assisted by Mr. A.R. Mohanty, learned counsel for the Petitioners and Mr. A. K. Parija, learned Advocate General assisted by Mr. P.K. Muduli, learned Additional Government Advocate for the State-Opposite Parties.

W.P.(C) No.8228 of 2021 Page 1 of 10

2. Petitioner No.1 is a Company engaged inter alia in the business of manufacturing sponge iron, pellet and other steel products in the State of West Bengal, which has two manufacturing units, such as Unit-I and Unit-II. Unit-I is engaged in manufacturing of sponge iron and Captive Power and was issued with a licence on 7th April 2016, by the Joint Director of Mines Joda, Keonjhar, Odisha, which was valid till 6th April, 2021. It was a licence for procurement of Iron ore and coal for processing, end-use and sale of residuals outside the State of Odisha. Unit-II manufactures iron ore pellet and beneficiation of iron ore, for which a licence was issued on 7th April 2016, valid till 6th April, 2021. This licence was for procuring iron ore and manganese for processing, end-use and sale of residuals outside the State. Both the licences stand renewed for further period and the copies of renewed licences have been enclosed with the petition. Incidentally, the renewal was granted on 20th February 2021.

3. There are three monthly return forms, such as Form-A and Form-E under the Orissa Minerals (Prevention of Theft, Smuggling and Illegal Mining and Regulation of Possession, Storage, Trading and Transportation) Rules 2007 (in short '2007 Rules') and Form-L under MCDR Rule, 2017 ('2017 Rules') that were required to be submitted by Petitioner No.1. Noticing certain discrepancies in the figure in those returns, a show-cause notice (SCN) was issued to Petitioner No.1 by the Joint Director of Mines, Joda, Keonjhar (Opposite Party No.3) on 6th January, 2021. The licences were suspended and the transit permits were also cancelled.

W.P.(C) No.8228 of 2021 Page 2 of 10

4. In response to the SCN, on 12th January 2021, the Petitioner filed a reply enclosing a verified tabulated chart giving the month-wise procurement of iron ore. Another SCN was issued on 25th January 2021 seeking to rescind rescission of the transit permits/licenses. Petitioner No.1 again filed a reply on 29th January 2021, wherein it pointed out that there was a bona fide clerical error in filling out the figures in the forms.

5. On 10th February 2021, after examining the reply, Opposite Party No.3 wrote the following letter to Petitioner No.1:

"xx xx xx In inviting a reference to the subject cited above, I am to say that in pursuance to letter No.1123/DM. dt. 10.02.2021 of Director of Mines, Odisha and affidavit submitted by you on 10.02.2021, the suspension order issued for both the units (license code No.071813429531 & No.071813429631) vide this office letter No.87/Mines dtd. 06.01.2021 is hereby revoked.

Further you are instructed to rectify the discrepancies notice in Form-N and Form-L immediately and not to repeat such type of mistake in future."

6. It appears that two days thereafter i.e. on 12th February 2021, the Director of Mines, Government of Odisha (Opposite Party No.2) wrote a letter to Opposite Party No.3 inviting reference to the 25th meeting of Reconstituted EAC (Industry-I) of the Ministry of Mines, Government of India (held on 25th -27th November, 2020). The letter noted that a 'fresh observation' had been made by REAC, which prima facie pointed to "irregularities committed by the various entities of the Rashmi Group of Companies and their promoters", which were under W.P.(C) No.8228 of 2021 Page 3 of 10 investigation of the Ministry of Environment of Forest and Climate Change (MoEF and CC). It then observed "Besides, it is alleged that, there is land transfer by various entities amongst themselves and it is not possible to know where exactly the trade licensee is actually stocking the ore procured. Till the time it is clearly established whether any entity of Rashmi Group has diverted the iron ore fines procured from Odisha to Rashmi Cement Ltd, and if so which entity has done such diversion, it is not desirable to allow any further Transit Permit to any of the entities who have trading license in Odisha."

7. Despite the above revocation of suspension of the licences, there was a sudden stoppage in dispatch of iron ore, coal and manganese ores which led Petitioner No.1 to send an email to Opposite Party No.3 seeking the reasons therefor. In a reply e-mail dated 15th February, 2021 Opposite Party No.3 referring to the above letter of Opposite Party No.2 dated 12th February 2021. Petitioner No.1 then made a representation to the Government of Odisha on 22nd February, 2021 protesting against the stoppage of issuance of transit permits. When no response was received, the present petition was filed.

8. On 4th March 2021, this Court passed the following order:

"1. Heard Mr. Pinaki Misra, learned Senior Advocate assisted by Mr. A.R. Mohanty, learned counsel for the Petitioners.

2. Petitioner No.1 Company, of which Petitioner No.2 is the Director, is aggrieved primarily by instructions dated 12th February 2021, issued by the Director of Mines, Odisha to the Joint Director of Mines, as a result of which, all transit passes to Petitioner No.1 have been stopped till inquires W.P.(C) No.8228 of 2021 Page 4 of 10 against Petitioner No.1 and its group of entities are concluded.

3. Mr. Pinaki Misra, learned Senior Advocate appearing for the Petitioners, refers to the ostensible reason in the impugned letter that there were "fresh observations made by REAC as stated in the minutes of meeting dated 25-27th November 2020"

from which "prima facie it appears that irregularities committed by the various entities of the Rashmi Group ... are under investigation of MoEF & CC."

4. On instructions, Mr. Misra states that all those queries that were raised in the aforementioned meeting were clarified in a subsequent meeting of the REAC. He seeks, and is permitted, to file an affidavit before the next date placing on record the subsequent minutes, copies of which are stated to have been obtained by the Petitioners from the website.

5. The immediate concern expressed by Mr. Misra is that the licenses issued to Petitioner No.1, which incidentally have been renewed recently, pertain to not just to iron ore, but also coal and manganese ore, all of which are required for running the units of Petitioner No.1. It is submitted that the impugned order will cause great inconvenience, if the units are compelled to shut down. He states that Petitioner No.1 is willing to abide by any reasonable terms that may be imposed for the issuance of transit permits, for keeping the operations of Petitioner No.1 continued.

6. Issue notice.

7. Mr. P. K. Muduli, learned Additional Government Advocate for the State assisting the learned Advocate General accepts notice for Opposite Parties.

W.P.(C) No.8228 of 2021 Page 5 of 10

8. Learned Advocate General states that on the question of interim relief, he will seek instructions.

9. At his request, list on Monday i.e. on 8th March, 2021."

9. Pursuant to the above order, Petitioner No.1 has filed an additional affidavit dated 5th March, 2021 enclosing therewith the minutes of the 25th meeting of the REAC held during 25th to 27th November, 2020 and the minutes of the 31st of meeting held on 25th to 26th February 2021. Copy of the letters dated 23rd February and 1st March, 2021 written by Petitioner No.1 to the Government of Odisha have also been enclosed.

10. On the same date, a preliminary affidavit has been filed on behalf of the Opposite Party No.1. In this affidavit, it is stated in para-4.5 that the rectification by the Petitioner, in terms of the letter dated 10th February 2021 revoking the suspension licence was "yet to be effected by the licensee". The affidavit then proceeds to refer to a detailed inquiry launched by the State into the mismatches as observed and admitted by the licensee and to the fact that since the inquiry was in progress, the permission for transactions relating to the Petitioner had been put on hold. It states that further decision on the matter will be taken as per law on completion of the detailed investigation.

11. Mr. Misra, learned Senior Advocate for the Petitioner draws the attention of the Court to the minutes of the 25th meeting of the REAC on 25th to 27th November, 2020. It contains detailed observations in relation to M/s. Rashmi Cement Limited and M/s. Rashmi Udyog Private Limited but none with regard to Petitioner No.1. He also drew attention to the subsequent minutes of the 31st meeting of REAC held on 25th to 26th February 2021 and in particular to the portion where the W.P.(C) No.8228 of 2021 Page 6 of 10 REAC has recommended the project proposals in relation to both the entities, subject to compliance with certain conditions. His submission is that the earlier observations in the 25th meeting of the REAC vis-à- vis the two entities no longer held good and stood clarified at the subsequent 31st meeting of the REAC. Mr. Misra submits that since the very basis of the letter dated 12th February, 2021 by opposite party No.2 to Opposite Party No.3 was rendered non-existent, there is no justification in continuing to suspend the transit permits of Petitioner No.1.

12. Mr. Parija, learned Advocate General for the State (Opposite Parties), in reply referred to the fact that Petitioner No.1 had admitted to the discrepancy in forms A, E and L and to the fact that the revocation of suspension of license was made subject to Petitioner No.1 rectifying the discrepancies in the said forms 'immediately' and undertaking 'not to repeat such type of mistake'.

13. At this stage, Mr. Misra, learned Senior Counsel handed over a copy of the letter written by Petitioner No.1 to Opposite Party No.3 stating that they had submitted the revised Form L online for the month of November, 2020 with a copy to the Indian Bureau of Mines (IBM). A copy was also handed over to the Court. He added that it was accompanied with an indemnity bond.

14. Mr. Parija, learned Advocate General nevertheless stated that Petitioner No.1 should be asked to file an affidavit stating that it has rectified the discrepancies and should undertake not to repeat such type of mistake in future. He also submitted that the right of the Opposite W.P.(C) No.8228 of 2021 Page 7 of 10 Parties to proceed against the Petitioner in accordance with law, in case the result of the inquiry warrants such action, should be reserved.

15. Having considered the above submissions, it appears to the Court that the basis for the impugned action against Petitioner No.1 was the letter written by the Opposite Party No.2 to Opposite Party No.3. In the e-mail communication sent to the Petitioner No.1 by Opposite Party No.3, when asked for the reasons for suspension of transit passes, the only reason given was the above letter which sets out the ostensible ground for the impugned action by referring to the minutes of 25th meeting of the REAC. From the minutes of the subsequent 31st meeting of the REAC, copy of which has been enclosed with the additional affidavit of Petitioner No.1, the correctness of which has not disputed, it is apparent that the observations pertaining to the two group entities of Petitioner No.1 mad in the 25th meeting of the REAC were clarified in the subsequent 31st meeting. The project proposals of the said two entities appear to have been approved subject to certain terms. Therefore, it does appear that the very basis for the action against Petitioner No.1 has been rendered non-existent.

16. At this stage, it must be noted that under Rule 9 of 2007 Rules, the competent authority can suspend or cancel the licence for breach of the terms and conditions of the license but this has to be a precedent by an SCN. In the present case, the earlier suspension of the licence which already stood revoked by the letter dated 10th February 2021, was subject only to the condition that Petitioner No.1 would rectify the discrepancies and undertake not to repeat such mistake in future. Although Mr. Misra has handed over to Mr. Parija a copy of the letter dated 1st March, 2021 in which it is stated that Petitioner No.1 has W.P.(C) No.8228 of 2021 Page 8 of 10 rectified the discrepancies, the Court finds no difficulty in directing that Petitioner No.1 will, not later than 10th March 2021, file an affidavit with Opposite Party No.3 confirming that it has rectified the discrepancies and undertaking not to repeat such mistake in future, as required by the letter dated 10th February, 2021 issued by Opposite Party No.3.

17. As regards the reasons given for suspension of the transit permits, Mr. Misra has rightly contended that the purported violation of any conditions regarding Environmental Clearance (EC) of any group entity of Petitioner No.1 cannot constitute a valid ground, in terms of Rule 9 of 2007 Rules, to proceed against Petitioner No.1. There is also merit in the contention, based on the judgment of this Court in Rashmi Cement Ltd. v. State of Odisha (2012) 113 CLT 177, which in turn followed the judgment of the Supreme Court in Commissioner of Police v. Gordhan Das Bhanji, AIR 1952 SC 16 that a quasi-judicial authority vested with the power for cancellation of a license, could not have acted under the 'dictation' of another authority. Also the impugned action of suspension of the issuance of transit passes ought to have been preceded by an enquiry, that prima facie discloses wrong doing by Petitioner No.1 in the form of violation of the terms of the license. The suspension of a licence even before the inquiry reveals prima facie violation of the terms of the license would obviously be vulnerable to invalidation on the ground of it being arbitrary and irrational.

18. In that view of the matter, the Court sees no justification in the Opposite Parties continuing to suspend the issuance of transit passes/permits to Petitioner No.1. It is directed that subject to W.P.(C) No.8228 of 2021 Page 9 of 10 Petitioner No.1 filing an affidavit as directed hereinabove on or before 10th March, 2021 with the Opposite Party No.3, the decision of the Opposite Parties to suspend issuance of transit passes/permits to Petitioner No.1 shall stand quashed. It is clarified that in the event that the inquiry undertaken by the Opposite Parties reveals prima facie violation of the conditions of the licences issued to Petitioner No.1, it would be open to the Opposite Parties to proceed against Petitioner No.1 strictly in accordance with law.

19. The writ petition is disposed of in the above terms.

20. An urgent certified copy of this order be issued as per rules.

............................

S. Muralidhar Chief Justice ......................

B.P. Routray Judge 8th March, 2021 //S.K. Jena, P.A.// W.P.(C) No.8228 of 2021 Page 10 of 10

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