T.N. GODAVARAMAN THIRUMULPAD v. UNION OF INDIA AND ORS

Citation: [2007] 12 S.C.R. 447

Court: Supreme Court of India

Bench: K.G. BALAKRISHNAN, ARIJIT PASAYAT, S.H. KAPADIA

Case summary

T.N. GODAVARAMAN THIRUMULPAD v. UNION OF INDIA AND ORS.pdf

Judgment text

T. N. GODAVARAMAN THIRUMULPAD v. UNION OF INDIA AND ORS. NOVEMBER 23, 2007 (K. G. BALAKRISHNAN, CJ. , DR. ARIJIT PASAYAT AND S. H. KAPADIA,JJ.

] Environmental Law : Sustainable Development-Balancing ofdevelopment needs with protection ofenvironment and ecology-Application by Mis VAL for clearancefor use ofreserveforest to set up "Alumina Refinery Project" in Tribal area involving mining ofbauxite deposits in Niyamgiri Hills in Orissa-HELD: while applying the principle of Sustainable Development one must bear in mind that development which meets the needs ofthe present without compromising the ability offuture generations to meet their own needs is sustainable development- Therefore, Courts are required to balance development needs with protection ofenvironment and ecology-It is duty ofState to devise and implement a coherent and co-coordinatedprogramme to meet its obligation ofsustainable development based on inter-generational equity-Mining is an important revenue generating industry- However, national assets cannot be allowedto beplaced into the hands of companies without proper mechanism and without ascertaining credibility of User Agency-Keeping in view the totality offactors mentionedin the order, clearance ofproject declined-However, Mis SIIL may move the Court ifthey agree to comply with modalities and Rehabilitation Package as suggested in the order-It is made clear that such an application will not be entertained if made by MIS VAL or Vedanta Resources.

A. P. Pollution Control Boardv. Prof M V Nayudu, (1999] 2SCC 718, relied on. CIVIL ORIGINAL JURISDICTION: I. A. Nos. 1324 & 1474 IN Writ Petition (Civil) No. 202of1995. (Under Article 32 ofThe Constitution oflndia) WITH I. A. Nos. 2081-2082@ W. P. (C) No. 549/2007. In W. P. (C) No. 202/1995. Goolam E. Vahanvati, Sol. Genl. of India, Amarendra Sharan, A. S. G. , U. U. Lalit (A. C. ), K. Parasaran, K. K. Venugopal, Siddhartha Chaudhury (A. C. ), P. K. Manohar, R. S. Rana, Rishikesh Barna, Haris Beeran, R. C. Kathia (for D. S. Mahra), Anil Katiyar, Jana Kalyan Das, Avijeet Bhujabal, Sanjay Parikh, Anitha Shenoy, Jitin Sahni, A. N. Singh, Ritwik Dutta, Anuradha Dutt, Vijayalakshmi Menon, Naresh Arora, Ekta Kapil, Raj Panjwani, Krishnan Venugopal, Susmita Lal, Riku Sanna (for >- Corporate Law Group) for the appearing parties. The following Order ofthe Court was delivered by ORDER Mis. Vedanta Aluminium Ltd. (fonnerly known as "Vedanta Alumina Ltd.

") has filed an allplication before this Court seeking clearance ofthe proposal for use of723. 343 ha ofland (including 58. 943 ha ofreserve forest land) in Lanjigarh Tehsil ofKalahandi District for setting up Alumia Refinery. The matter has been pending since 6. 3. 04. The Project consists ofsetting up of a large integrated aluminium complex in Orissa by Ml s. Vedanta Aluminium Ltd. (Mis. VAL, for short). The short question which needs to be answered is :whether Mis. VAL should be allowed to set up its Refinery/Project known as "Alumina Refinery Project". As stated above the Project involves the proposal for diversion of 58. 943 ha of forest land. As a matter ofpreface, we may state that adherence to the principle ofSustainable Development is now a constitutional requirement. How much damage to the environment and ecology has got to be decided on the facts of each case.

While applying the principle of Sustainable Development one must bear in mind that development which meets the needs of the present without compromising the ability of the future generations to meet their own needs is Sustainable Development. Therefore, courts are required to balance development needs with the protection ofthe environment and ecology. It is the duty ofthe State under our Constitution to devise and implement a coherent and co-ordinated programme to meet its obligation of Sustainable Development based on inter-generational equity (See: A. P. Pollution Control Board v. Proof M V Nayudu, [1999] 2 SCC 718. Mining is an important revenue generating industry. However, we cannot allow our national assets to be placed into the hands of companies without proper mechanism in place and without ascertaining the credibility ofthe User Agency. It is not in dispute that in this case mining of bauxite deposits is required to take place on the top ofNiyamgiri Hills.

MOEF has given an environment clearance for Alumina Refinery Project. All requisite permissions have been obtained by the said applicant. The Refinery to be constructed by Mis. VAL is one million ton Alumina Refinery at Lanjigarh at an estimated cost ofRs. 4000 crores. The mining lease shall stand in the name of OMC Ltd. (State Undertaking). The agreement between OMC Ltd. and Mis. VAL indicates that it is a joint venture in which Mis. VAL is a contractor. The agreement further indicates that the material will be sold by the lessee to M/s. VAL. CEC has objected to the grant ofclearance as sought by Mis. VAL on the ground inter alia that the Refinery is totally dependent on mining ofbauxite from Niyamgiri Hills, Lanjigarh, which is the only vital wildlife habitat, part ofwhich constitutes elephant corridor and also on the ground that the said Project, including the mining area, would obstruct the proposed wildlife sanctuary and the residence of tribes like Dongaria G Kandha.

According to CEC, Niyamgiri Hills would be vitally affected if mining is allowed in the above area as Niyamgiri Hills is an important water source for two rivers. According to CEC, the Project would also destroy flora and fauna ofthe entire region and it would result in soil erosion. According to CEC, use offorest land in an ecologically sensitive area like Niyamgiri Hills should riot pennitted. On the other side, we have a picture ofabject poverty in which the local people are living in Lanjigarh Tehsil including the tribal people. There is no proper housing. There are no hospitals. There are no schools and people are living in extremely poor conditions which is not in dispute. Indian economy for last couple of years has been growing at the ~ rate of 8 to 9% of GDP. It is a remarkable achievement. However, accelerated growth rate of GDP does not provide Inclusive Growth.

Keeping in mind the two extremes, this Court thought of balancing development vis-a-vis protection ofwildlife ecology and environment in view ofthe principle ofSustainable Development. At this stage, we may observe that Mis. VAL has obtained all necessary clearances. It now seeks clearance of the Project from this Court before it is placed before the Central Government. The matter was heard at length on 26. 10. 07. At that time, we were infonned that Mis. VAL is a subsidiary ofMis. Sterlite Industries (India) Ltd. (M/s. SUL, for short) and that Mis. SIIL shall provide jobs on pennanent basis to the tribals, particularly, land-losers. Since then we have received two affidavits both dated 2. 11. 07. In the first affidavit, filed by Mis. VAL, it is stated that plant maintenance, power plant operations, house keeping, canteen, material handling etc. Will be outsourced. There is no positive statement as to the number ofpersons who would get jobs on permanent basis.

The statement refers only to the potentiality to employ. There is no study made in that regard. There is no statement as to in which category they would be fitted. It is important to note that the Project is funded by Vedanta Resources (a U. K. - based company). According to the newspaper reports Vedanta Resources has been banned from Norway for non-compliance oflabour laws and for violation ofhuman rights. We quote hereinbelow the extract from the economic daily which is recently appeared in one ofthe dailies: "Norway dumps Vedanta from oil fund Reuters OSLO __--("- NORWAY has dropped British mining and metals group Vedanta Resources from its $350 billion oil fund at the recommendation ofthe fund's ethics council, which blamed it for environmental damage and human rights violations, the finance ministry said. Norway's Government Pension Fund invests Norway's petroleum wealth in foreign stocks and bonds to save for when the oil and gas run out.

It is one ofthe world's biggest sovereign wealth funds. "According to the recommendation (ofthe council), the Fund runs and unacceptable risk ofcomplicity in present and future severe environmental damage and systematic human rights violations by continuing to invest in the company", the finance ministry said. Vedanta Resources' core business is mining and production of copper, aluminium and zinc in India. It also has operations in Australia, Zambia and Armenia. " Vedanta Resources is accused ofhaving caused environmental damage and contributed to human and labour rights violations", the ethics council said. "Vedanta is accused ofhaving caused environmental damage and contributed to human and labour rights violations", the ethics council said. " We do not wish to express any opinion on the correctness ofthe said Report. However, we cannot take the risk of handing over an important asset into the hands ofthe company unless we are satisfied about its credibility.

As stated above, under the Agreement between OMC Ltd. and Mis. VAL,the name ofthe contractor is Mis. VAL. The Agreement states that Mis. VAL is the subsidiary ofMis. SIIL. However, the Financial Statements annexed to the affidavit of Mis. SIIL dated 2. 11. 07 shows that Mis. VAL is an associate company and not a subsidiary ofMis. SIIL (See: page 31 ofthe affidavit filed by Mis. SIIL). On going through the Financial Statements ofMis. SIIL, we find that the operating profits from ·--r aluminium segment is negligible for the years ending on 31. 3 . 06 and 31. 3. 07 (See: page 65 ofthe affidavit filed by Mis. SIIL). However, under Segment Reporting (in the Audited Financial Statement) the income from aluminium segment is Rs. 455 crores (See: website ofSIIL). We do not have the list ofassets ofMis. VAL. Lastly, as stated above, Mis. VAL is joint venture partner with OMC Ltd. Nothing prevents Mis. VAL from terminating joint venture agreement. We do not have even the Accounts of Mis. VAL.

In the circumstances keeping in mind the totality of the above factors, we are not inclined to clear the Project. Suggested Rehabilitation Package: Liberty is, however, given to Mis. SIIL to move this Court if they are agree to comply with the following modalities as suggested by this Court. It is made clear that such an application will not be entertained if made by Mis. VAL or by Vedanta Resources. (i) State ofOrissa shall float a Special Purpose Vehicle (SPV) for scheduled area development ofLanjigarh Project in which the stake-holders shall be State of Orissa, OMC Ltd. and Ml s. SIIL. Such SPV shall be incorporated under the Companies Act, 1956. The Accounts of SPC will be prepared by the Statutory auditors ofOMCLtd. and they shall be audited by the Auditor General for State ofOrissa every year. Mis. SIIL will deposit, every year commencing from 1. 4. 07, 5% of its annual profits before tax and interest from Lanjigarh Project or Rs.

10 crores whichever is higher for Scheduled Area Development with the said SPV and it shall be the duty ofthe said SPV to account for the expenses each year. The annual report of SPV shall be submitted to CEC every year. IfCEC finds non-utilisation or mis-utilisation offunds the same shall be brought to the notice ofthis Court. While calculating annual profits before tax and interest Mis. SUL shall do so on the basis ofthe market value ofthe material which is sold by OMC Ltd. Mis. SIIL or its nominee. (ii) In addition to what is stated above, Mis. SIIL shall pay NPV of Rs. 55 crores and Rs. 50. 53 crores towards Wildlife Management Plan for Conservation and Management of Wildlife around Lanjigarh bauxite mine and Rs. 12. 20 crores towards tribal development. In addition, Mis. SUL shall also bear expenses towards compensatory afforestation. '---:-- (lii) A statement shall be filed by Mis.

SIIL with CEC within eight weeks from today stating number of persons who shall be observed on permanent basis in M/s. SIIL including landlosers. They shall give categories in which they would be permanently absorbed. The list would also show particulars ofpersons who would be employed by the contractors ofM/ B • s. SIIL and the period for which they would be employed. (iv) The state Government has the following suggestions on this issue:- 1. The user agency shall undertake demarcation ofthe lease area on the ground using four feet high cement concrete pillars with serial number, forward and back bearings and distance from pillar to pillar. 2. The user agency shall make arrangements for mutation and transfer, of equivalent non-forest land identified for compensatory afforestation to the ownership ofthe State Forest Department. 3.

The State Forest Department will take up compensatory afforestation at project cost with suitable indigenous species and will declare the said area identified for compensatory afforstation as "protectedforest" under the Orissa Forest Act 1972 for the purpose ofmanagement. 4. The user agency shall undertake Rehabilitation ofProject affected families, ifany as per the Orissa Rehabilitation and Resettlement Policy 2006. 5. The user agency shall undertake Phased reclamation of mined out area. All overburden should be used for back filling and reclamation ofthe mined out areas. 6. The user agency shall undertake fencing ofthe safety zone area and endeavour for protection as well as regeneration ofthe said area. It shall deposit funds with the State Forest Deptt. for the protection and regeneration ·~ ofthe safety zone area. 7. Adequate soil conservation measures shall be undertaken by the Lessee on the overburden dumps to prevent contaminatinr ofsteam flow. 8.

The user agency should undertake comprehensive study j. on hydrogeology ofthe area and the impact ofmining on the surrounding water quality and stream flow at regular interval and take effective measures so as to maintain the pre mining water condition as far as possible. 9. The user agency should undertake a comprehensive study ofthe wild life available in the area in association with institutes of repute like Wild Life Institute of India, Dehradun, Forest Research Institute, Dehradun etc. and shall prepare a site specific comprehensive Wild Life Management plan for conservation and management of A the wild life in the project impact are under the guidance ofChiefWild Life Warden ofthe State. l0. The user agency shall deposit the NPVofthe forest land sought for diversion for undertaking mining operations. 11.

The user agency shall prepare a comprehensive plan for the development oftribals in the project impact area taking into consideration their requirements for health, education, communication, recreation, livelihood and cultural lifestyle. 12. As per the policy of the State Government, the user agency shall eaimark 5% ofthe netprofit accrued in the project to be spent for the development of health, education, communication, irrigation and agriculture ofthe said schedule area within a radius of 50 Kms. 13. Controlled Blasting may be used only in exigencies wherever needed to minimize the impact ofnoise on wild life ofthe area. T. N. GODAVARAMAN THIRUMULPAD v. UNION OF 455 INDIA 14. The User Agency shall undertake development of greenery by way of plantation of suitable indigenous species in all vacant areas within the project. 15. Trees shall be felledfrom the diverted area only when it is necessary with the strict supervision ofthe State Deptt. .. at the cost Of the project. ___,( 16.

The forest land diverted shall be non transferable. Whenever the forest land is not required, the same shall be surrendered to the State Forest Deptt. under intimation to Ministry ofEnvironment and Forests, Government of C India IfM/s. SIIL, State ofOrissa and OMC Ltd. jointly agree to comply with the above Rehabilitation Package, this Court may consider granting of clearance to the Project. CONCLUSION IfM/s. SIIL Is agreeable to the aforestated Rehabilitation Package then they shall be at liberty to move this Court by initiating a proper application. This Court is not against the Project in principle. It only seeks safeguards by which we are able to protect nature and subserve development. I. As. are disposed ofaccordingly. However, we once again reiterate that the applications filed by Mis. stand dismissed. RP. Interlocutory Application disposed of.