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Karnataka Set to Lose INR 30,000 Crore in 20 Years of NMDC miming

Mining News - Published on Tue, 23 Jul 2019

Image Source: Bangalore Mirror
Bangalore Mirror reported that a division bench of the High Court has struck down a condition imposed on National Mineral Development Corporation by the State Government levying a premium equivalent to 80% of average sale price of iron ore while extending the period of lease for a mine. The court said the State Government does not have the power to impose a premium through an executive order. The court said it was laudable that the state was trying to gain extra revenue but it was not supported by its powers. The State Government argued that it may lose INR 30,000 crore due to this over the next 20 years that NMDC will continue mining. NMDC has been conducting iron ore mining on 2,000 hectares from 1968. The lease was extended for 20 years with effect from November 3, 1988. The lease was sought to be extended again. The State Government extended it for another 20 years from 2018 but with the condition of the 80 per cent premium. Similar mines, including NMDC’s other mines in the vicinity pay similar or more premium.

However, the renewal of lease by the State cannot include the new condition, the HC said. “When viewed from the State Government’s angle, their object to augment revenue could be thought laudable, the condition to pay premium is not sustainable for want of statutory power. Therefore, the decision of State Government to impose premium by an executive order is clearly opposed to law,” the HC said. The State pointed out that it was getting a premium of 75.45% in cases where mining leases have been granted through auction. The HC said that the State should have bestowed their attention to this aspect while considering NMDC’s application for renewal.

The HC, however, pointed to a solution. “In the circumstances, it may be appropriate for the State Government to take any action, such as withdrawing the impugned order, if permissible in law to achieve their object of augmenting revenue,” it said, but warned that, “We hasten to add that we express no opinion on the legal sustainability of this option.”

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Posted By : Rabi Wangkhem on Tue, 23 Jul 2019
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