MAC: Mines and Communities

Supreme Court Hearings On The Nyamgiri Case

Published by MAC on 2007-05-15


[Taken from verbatim notes at the Hearing itself, held in Delhi on May 16 and 18 2007]

IA No. 1324 and 1474: Vedanta Alumina Ltd.

The hearing on the aforesaid applications took place over two dates, 16th and 18th of May 2007, in the Supreme Court before a bench comprising The Hon’ble The Chief Justice of India, Mr. K.G. Balakrishnan, Hon’ble Mr. Justice Arijit Pasayat, and Hon’ble Mr. Justice S.H. Kapadia. Mr. UU Lalit, Sr Advocate appeared as Amicus Curiae, while Mr. KK Venugopal, Mr. K. Parasaran, and Mr. Vikas Singh, Sr. Advocates, appeared on behalf of Vedanta, Orissa Mining Corporation [OMC] and UOI, MoEF [Ministry of Environment and Forests] respectively.

Notes on hearing dated 16.5.2007

The hearing commenced with Mr. UU Lalit, Sr. Advocate and Amicus Curiae, briefly placing before the Court the facts leading up to today’s hearing. Apart from the report of September 2005 of the CEC [Central Empowered Committee] which had given an adverse finding, the Court had also before it the reports of the WII and the CMPDI. These had been placed before the FAC vide order dated 8.12.2006 with a clear direction that all the three reports be considered. In fact, the FAC had not considered the report of the CEC at all, and the CEC has given a supplementary report dated 22.2.2007 which is also adverse to the project.

The Court was however not inclined to go into all this, and directed that the hearing be commenced.

Mr. KK Venugopal, Sr Advocate, appearing for Vedanta, opened the arguments, and continued for a little less than 2 hours till 4 p.m.

At the very outset Mr. Venugopal pointed out that the State of Orissa is very rich in mineral wealth, and especially in bauxite. In a neighbouring district, NALCO has been functioning for the last 16 years, and is a true success story. The vegetation of that area, like in the present case, had sparse vegetation prior to mining, and today after 16 years of mining, NALCO has reforested the area so well that it is as good, if not better than before. NALCO is therefore a shining example that in this area it is possible to neutralize the impact of mining on the environment. Yet Kalahandi is the poorest district in the country, and there is excessive poverty, even to the extent of human trafficking being rampant.

After this he listed a number of key figures relating to the project. The Orissa Mining Corporation (OMC) which is a wholly-owned corporation of the State of Orissa, has applied for diversion of 660 ha of forest land for this project. Some 50,000 trees will be cut, but this will be done over a period of 30 years, and also the compensatory afforestation plan is to plant 16 lakh [16, 000,000] trees, which will more than offset any damage. In fact, the gain is far greater than the loss. The project will result in direct and contract employment to 7000 persons, and the infrastructure will benefit 25,000 persons. The total investment will be Rs. 3500 crores [35,000,000,000 rupees] and NPV alone of Rs. 54 crores will be paid. Etc. etc. All this goes to show that the project will be instrumental in ensuring that the tribals and other local people will be uplifted from dire poverty and brought into the fold of development.

Mr. Venugopal submitted that mining will be done in such a way that at any given point of time not more than 20 ha. will be mined, and therefore the remaining area will remain undamaged. Once this area has been mined, the company will move to the next 20 ha., while at the same time reclaiming and regenerating the area that they have recently vacated. There was some discussion on how it can be ensured that the 20 ha. area that has been fully mined is properly reclaimed, and the Court wanted to know what is the mechanism for certification that this is being done properly. Since there was no immediate and clear information on this (Indian Editor’s note: surprisingly no-one thought of looking at the conditions in the environmental clearance and forest clearance), the Court wanted to know how Vedanta would feel about the CEC certifying that the reclamation is properly done as a pre-condition for the company moving to the next compartment of 20 ha. There was some discussion among the company officials present in Court and their lawyers, and thereafter Mr. Venugopal informed the Court that the company had no objection at all, if it was permitted to reclaim the first compartment of 20 ha. while mining in the second compartment, and would be permitted to move to the third compartment of 20 ha. only after the CEC certifies that the first compartment is properly reclaimed. Similarly, it would move to the fourth compartment of 20. ha only after the second compartment has been properly reclaimed, and so on. (Indian Editor’s note: During this animated discussion, the CEC and the Amicus retained a stoic silence, and refused to participate.)

He relied heavily upon the example of NALCO in the neighbouring district, where reclamation has been extremely effective, and also adverted to the ALCOA mining operations in Australia, where there has been careful documentation of the pre-mining, during and post-mining operations, to show that the impact of mining can be completely reversed.

Mr. Venugopal then proceeded to read from the WII report, relying upon those portions of it which support the stand of the State govt that this area has very sparse trees, is not a bio-reserve or in any way different from a number of other areas in Orissa where mining is going on. It is not an elephant corridor nor a habitat, nor is it a water source. In any case the height of the conveyer belt will ensure that elephants can pass underneath without any difficulty.

He then proceeded to read the portions of the WII Report dealing with Tribal Life, and [stated] that there are no Dongaria Kond tribals in this area. Those living in surrounding areas will greatly benefit from the project because it will assist them to improve their lives above mere survival. Fortunately the area is free from the scourge of shifting cultivation, maybe because of the religious sentiments of the people.

Moving on, the Court came back to the reference made by Mr. Venugopal earlier that Naxalite [“Maoist”] activity has risen from 1 district in 1990 to 10 districts today. It was of the view that the reason why naxalites are growing in influence is that there is extreme poverty in the area, and the government has not chosen to ensure development takes place. When development comes, it comes in the form of exploitative mining, which again does not take the local people along. Naturally, they fall prey to the naxalites.

To this Mr. Venugopal replied that the company is committed to paying Rs. 12.20 crores into the Tribal Development Fund and also 5% of its net profit every year into the same Fund. This is a massive amount compared to the meager amount of Rs. 1.9 crores (aggregate) that has been spent by the state government in the area since 1990 to today.

The Bench was keen to know whether the commitment was to pay 5% of the unit’s net profit or 5% of the net profits of the company worldwide. It was immediately clarified that the company was committed to the former! To this, the Court responded by stating that it was unlikely that the Company would make any profit in the first few years of its operation, and in fact it was likely that the net profits would never accrue, since it is a simple matter to show all profits as absorbed by depreciation and such like. Did the Company commit to paying a fixed amount even if it made no profits?

Again there was some discussion among the officials and lawyers, after which Mr. Venugopal made a commitment across the bar that the company would pay Rs. 10 crores per annum or 5% of net profits, whichever is higher, into the Tribal Development Fund. He also handed over photographs showing all the good works the company is already doing, such as running schools, free cataract camps, community centre.

The Court was then vexed by issue of how much of this would actually reach the poor tribals, to which Mr. Venugopal responded that if the distribution of money was left in the hands of the company, they would certainly ensure that every rupee is used only for the benefit of the target group, but if the money goes in the hands of an intermediary, there is nothing the Company can do. This issue was not further discussed.

The Court then observed that it is all very well to make provision for the tribals by putting money into the Tribal Development Fund, but what about the animals? There was considerable discussion about the elephants, and how important the area is to them. Mr. Venugopal read portions of the WII report which states that the area is not an important habitat for elephants, and that when the WII team visited the area it did not spot any elephants, and all it found was elephant dung which was several days old.

The Court was obviously not convinced at all, and asked him to inform them about the exact location of the “elephant corridor” and whether this can be excluded from the mining operation. It also wanted to know what will be the impact of the blasting and resultant vibrations on the behavior of the animals, and what precautions had been taken to prevent them from running into the nearby human habitations. In any case, during the blasting that took place in the neighbouring NALCO, all the animals must have fled the area and come here. Where will the animals go once the blasting starts here as well?

Mr. Venugopal responded that this is the reason the company is using state of the art technology and taking all steps to ensure that the effect of the blasting is minimized. Therefore they will be using the most modern machinery with inbuilt silencers, there will be no movement or mining at night, blowing of horns will be forbidden, and so on. All these precautions will be taken to ensure the damage is minimal, if any.

The Court then put a query to the various counsel present to the effect whether the CEC can come up with suggestions as to how the impact of the mining on the animals can be minimized. The Court pressed all the counsel present for suggestions on how this could be done.

At this stage Mr. Lalit submitted that with full responsibility and acting upon instructions received he is stating that there is no possibility of any such plan.

The Court then suggested that the CEC along with the Chief Wildlife Warden can sit together and come up with a plan on how to mitigate the impact of the mining on wildlife.

Mr. Venugopal stated that there is already a Wildlife Management Plan which is very comprehensive, but the company is amenable to the idea of the CEC giving its inputs. Mr. Goolam Vahanvati, ASG, appearing for the MoEF, stated that the Centre is amenable to monitoring of the progress and implementation of the project at regular intervals by and expert body such as the WII.

Mr. Lalit reiterated that he has instructions that no such plan can be devised, that this area is a sanctum sanctorum for the animals, and mining will destroy it.

The Court again suggested that maybe along with the WII the CEC can also be involved in the monitoring of the project implementation, to ensure the impact on wildlife is minimized, and directly asked the CEC what it thinks can be done.

Mr. Lalit responded that nothing can be done.

At this stage the bench clearly ran out of patience and told all the counsel present that the court will reserve orders, and all of them should present their arguments in the form of written submissions. Mr. Lalit objected to this stating that he needs at least one hour to address oral arguments, but the Court responded that he may give his suggestions in writing, and they will read it very very carefully.

It was only after considerable persistence that the Chief Justice agreed to take up the matter on 18th and hear the Amicus fully on that date.

Hearing on 18.5.2007

Mr. K. Parasaran, Sr. Advocate appearing for OMC, argued that in (2002) 10 SCC 606 @ para 40 this Court has held that there is a need to balance sustainable development with ecology. There is a need to adjust. The same view has been reiterated in (2000) 10 SCC 664 (Narmada case) @ pg. 764-66 where the dam will submerge 2000 ha of forest land. It was also stated in the SR Oil case (2004) 2 SCC 392 where the Court has stated that PILs, NGOs and even the CEC are in the nature of watchdogs, but there is a need to balance development and ecology.

The State of Orissa typifies the phrase “poverty amidst plenty”—it is pithily applied to the State in general and this district in particular, where there is extreme poverty and underneath there are rich mineral reserves. The State Government owes a duty to the future generations to ensure that the development takes place, even while it makes certain that there are sufficient safeguards. If this was a state where there is nothing, to allow the situation of poverty to continue would be understandable, but in Orissa where there is so much wealth, it is not logical.

Mr. UU Lalit, Sr. Advocate and Amicus Curiae, submitted that it is true that there is a need for sustainable development, and for development to balance with ecology, it is also true that the company will make all efforts to restore the damage done, and it is indeed true that Orissa has enormous mineral wealth. At the same time, it is important to examine whether this destruction can be undone, and whether the pristine natural ecology can be restored. It is submitted in this case that restoration is not possible.

To establish this, the following documents and materials were pointed out:

A. Photographs of the Niyamagiri Hills, or Sacred Niyamagiri Hills as they are locally worshipped, were shown. Clear that there is a thick dense forest and the averments of the company that the terrain has sparse vegetation is incorrect. The area has enormous bauxite, which has a peculiar sponge like quality. It absorbs water during rainfall, and then slowly releases the same to feed the streams, rivers and other water sources for a huge area downstream. This is a natural phenomenon going on for thousands of years, and there is little or no human presence, which means that this is one of the few areas which is preserved in its natural pristine form.

B. It is in this area that we are going to permit human intervention in the form of mining. Therefore the question to be asked is whether the human intervention will be irreversible, and whether this issue has been interrogated scientifically and a clear conclusion arrived at. If not, then we have to adopt the precautionary principle and say “No”.

C. The photographs also show that the vegetation is rich, and this is an oasis in a drought prone area. Where the vegetation is so rich, it is obvious that there are water reserves. Apart from that, it is an area which is inhabited by elephants. The elephant is a large herbivorous animal and requires tremendous vegetation.

D. If there is a doubt in our minds about whether the damage is irreversible, we have to apply

- the precautionary principle, let us err on the safer side
- can there be alternatives? Yes, there are 3 reports saying there are alternative sites
- we can wait for 30-40 years until we are sure about whether the damage is irreversible or not, and the reserves of bauxite are not going anywhere.
- The other issue that must be pointed out is the linkage between the Refinery and the Mining Project. The Refinery is primarily in a non-forest area, and in its 700 ha area, only 58 ha is forest land. (Counsel for Vedanta objects stating that there is no forest land in the Refinery.) The Mine Project, which is in the Niyamagiri hills, is 4 kms away and is essential to the Refinery, and therefore the two are interdependent and part of the same enterprise. Although logically the company ought to have made a combined application, it chose to bifurcate the two. When the CEC put it to them that these are one project, they submitted that there is no link. Then when the CEC said that in that case look for an alternative site, the Company changed its stand and stated that the two are intrinsically linked. At which the CEC took the view that the work in the both Refinery and the Mining Project should cease until the approval in the latter is obtained, whereupon the Company again changed its stand.
- In response to a query from the Court to clarify the CEC position on this issue, Mr. Lalit stated that in the event that the Refinery is a stand alone item with no connection to Niyamagiri, the CEC has no objection to it. However, if the company argues the two are interdependent, then the CEC must take the stand that it objects to both the Refinery and the Mining project.

E. Site Inspection Report of MoEF @ pg. 206 from pg 219:- The recommendations of the Chief Conservator make the following points:
a. Alternative sites are available and have been noted in the company’s proposal itself;
b. There is likelihood of adverse impact on wildlife;
c. Water retention capacity of the area will be damaged. The mining activity at the top of the mountain will involve cutting through the mountain, which will expose the rocks beneath the soil, and this will affect the flow of water to streams and rivers below;
d. There is a need for extensive studies to determine the impact of the mining project on the water sources and river systems.
Mr. Lalit submitted that this report clearly shows that maybe the company can restore the tree cover, but having destroyed what is beneath the soil, how do we get it back.

F. Proposal of Vedanta @ pg 102
In this document the company itself admits that the Niyamagiri hills have an ecologically valuable environment, and that there are dense forests surrounded by barren land, therefore virtually admitting that the hills are an oasis in a desert.

G. Schematic drawing of the project made by the CEC @ pg. 239- this shows that once the company cuts through these lands, they may in all honesty repair it, restore it, afforest it, plant any number of trees on it, the water system can never be put back.

H. The CEC report of September 2005:
a. The report of the CEC states that the area was constituted as an Elephant Reserve by the State govt. and that there was a proposal pending for declaring it as a wildlife sanctuary. It has therefore been recognized by the State govt itself for its floral and faunal wealth. It is also a critical water source for the drought prone districts of Kalahandi and Rayagada, and there are 22 water harvesting structures located in the foothills. Two major rivers emerge from the hills. Mining these hills and disturbing the water systems will result in desertification.
b. Yet the affidavit of the State Govt. states that only 30 feet at the mountain top will be mined and cut, and therefore the source of the river and the other water systems will not be affected.
Mr. Lalit submitted that it is not understood how the state government has made such a submission. The mechanism of a water system is that the water collects at the mountain top and percolates to the streams rivers and water sources below. If the top is not there, the entire system will be damaged.
c. The CEC also refers to a fact-finding report which states that the effect of mining will be irreversible.
Mr. Lalit submitted that since there was little or no human population in the area, this meant that the Niyamagiri Hills were in the pristine natural state, and therefore an important ecosystem and gene bank.
d. The Report of the CEC pointed out that it is obligatory for any project to obtain all clearances prior to commencement of operations, which has been violated in the present case by Vedanta. The report also notes that Vedanta in its mining plan has stated that there are alternative sites, which it plans to shift to once the mining in this area is exhausted
Mr. Lalit submitted that we are being once again driven into a fait accompli situation where the Refinery exists, and therefore permission for the mine has to be given.

At this stage the Court asked Mr. Lalit whether the CEC has at any stage independently looked at the availability of alternative mining sites. To this Mr. Lalit responded that this has not been done by the CEC.

At this point the momentum of Mr. Lalit’s argument was interrupted by Mr. Venugopal, who stood up to make an interjection, and then continued to speak for over half an hour. In this time, Mr. Parasaran and Mr. Vikas Singh also stood up and addressed arguments all over again. For much of this time, Mr. Lalit remained standing, a dignified protest to the interruption.

Mr. Venugopal stated that all bauxite reserves in Orissa have been committed/ contracted/ licensed to some corporation or other, whether it is NALCO or whoever, and there is no bauxite left in Orissa. Therefore for the CEC to say that there are alternative sites available is unsupportable. He read out extracts from various documents of the State Govt. to reinforce this point.

Mr. Vikas Singh, ASG and Sr Advocate, appearing for the Union of India, MoEF, stated that the decision on whether this project should go ahead or not lies finally with the Central Government, and this is the procedure laid down in the Forest Conservation Act. In fact, whatever may be the recommendation of the FAC, it is the central govt that must take the final decision, and at present it is the Prime Minister himself who will take this decision in his capacity as the Minister of Environment and Forests. (Editor’s note: This last was repeated several times.) It was therefore his view that the Court should send the matter to the Central Govt, since the FAC has already given its decision, and allow the Central Govt to perform its statutory function.

The ASG further read out section 2 and 3 of the FC Act, and submitted that under the Act the decision of the Central Government is final, unless of course it is challenged in a court of law under the general power of the Court of judicial review. These are decisions that are based on technical materials and must be left to the experts, he felt, and the Court should not trouble itself like this. The decision making process which is being attempted in the Court today is actually the job of the Central govt.

At this stage the Court spoke its mind that it is not inclined to grant approval to this project, because it feels that the impact is going to be irreversible. This is not the same thing as undertaking a developmental project in an area which has sparse trees, rather the evidence placed before the Court clearly shows that there is thick pristine forest, and also the issue of irreplaceable water resources. (Editor’s note: It must be clarified that no order to this effect was passed.)

At this Mr. Venugopal again sought to bring to the attention of the Court the materials showing that the findings of the CEC with regard to impact on water sources are wrong. He relied upon the CMPDI report to make the following statements:
a. the ‘surface run off’ from the Niyamagiri hills will be unaffected by mining activities;
b. the groundwater recharge far from being damaged, will actually be augmented due to the exposure of the porous rocks and the removal of the soil covering them;
c. mining will also have no impact on the aquifer system
d. and so on.
He then turned to the final report of the CEC dt. 22.2.2007 and read out the whole thing, making critical comments as he went along. His basic submission was that this report makes no new statement, and is a re-hashed version of the old report. There is not a single statement of fact to refute the findings of expert bodies such as the WII and the CMPDI nor has any other expert report been produced to refute these findings. Rather, the CEC report as well as the Amicus have taken an extremely negative and unconstructive approach, which is very disappointing.

Finally, he submitted that this project will change the face of Kalahandi, where people are today pulling out roots and cooking them, cutting grass and cooking it, selling their children to traffickers, and roaming around with swollen bellies. The govt has spent only Rs. 1.69 crores in the last 17 years, and this project will give the people of Kalahandi a roof over their heads and two square meals a day. It is very strange that the CEC should object to this. In 2005 this very Court in the PUCL case had directed that the excess foodstocks which were rotting outside the silos of the Food Corporation of India should be transported to Kalahandi, to alleviate the starvation there. The Court is seized of this aspect of the matter.

Mr. Parasaran, Sr. Advocate, also made a short intervention stating that the approach of the CEC amounts to obstruction of development, and that it is very sad to see this adversarial approach of the CEC in a PIL [Public Interest Litigation], it should have not done so.

Mr. Lalit maintained a stoic silence through this continuing interruption, and since it was already 4 p.m. he informed the Court that since he has not finished his submissions, the matter may be posted on any other day when the Court is able to hear him. He did, however, take the opportunity to set the record straight that he had commenced the arguments on 16th by pointing out that the order of the Court dt. 8.12.2006 has not been complied with; and that he has all along been fair and mindful of the bonafides of the company in its commitment to regeneration of trees.

At this stage the Court asked the CEC that it should look into the availability of alternative sites, and inform the Court of the same after the vacations. Counsel for the other parties also sought to explore the various issues raised during this hearing. Meanwhile the ASG reiterated his submission that the matter be sent to the Central Government.

The Court finally passed an order adjourning the applications to 7.8.2007 for further hearing. The exact order passed was not very clear.
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