Govt may move HC on Rule-37 violation by lessees

Last Updated: Mon, Dec 03, 2012 04:10 hrs

With six out of eight lessees moving the revision authority under Union mines ministry against the Odisha government in case of violation of Rule-37 under Mineral Concession Rules-1960, the state government is mulling to contest against the lessees in the Odisha High Court.

Six lessees including Sarada Mines and Indrani Patnaik had approached the revision authority and secured orders that have barred the state steel & mines department to pass any order in their cases. The department, however, has been allowed to conduct hearing.

“Since the revision authority has barred us from passing any final order, we are only conducting hearing in case of six lessees. This order is not acceptable to us. We believe that the state government should not be restrained from passing final order. So, we are contemplating to move the Odisha High Court”, a senior steel & mines department official told Business .

The eight mining lessees that have been found guilty of violating Rule-37 are Indrani Patnaik, KJS Ahluwalia, RP Sao, Sarada Mines, Aryan Mines (Koira), Mala Ray mines (Keonjhar), Kabita Agrawal (Koira) and Mideast Integrated Steel's (Mesco) Barbil mines.

The most glaring violation was noticed in case of Sarada Mines. The lessee was found to sell the entire run of mine (ROM) produce from its Thakurani iron ore mines spread over 947.04 hectares in Keonjhar district to Jindal Steel & Mines Ltd (JSPL) without any agreement. The case was even challenged in the Odisha High Court..

The Odisha High Court, adjudicating on a petition, in June this year, had disposed off the case, asking the steel & mines department to pass an order in Rule-37 violation by Sarada Mines, within four weeks.

The steel & mines department expressed its helplessness, saying it was restrained to pass an order by the revision authority.

The arrangement between Sarada Mines and JSPL, apart from being in violation of provisions of Rule-37, also contributed to lower value added tax (VAT) collection by the Odisha government on account of low pricing of ROM in comparison to the value derived by JSPL from the product vis-a-vis the market price.

As disclosed in the tax audit report, ROM was sold by Sarada Mines to JSPL at the average rate of Rs 400 per tonne during 2008-09. The ROM is converted by JSPL into products including calibrated ore having much higher market value by spending relatively insignificant amount on processing.

The low pricing is also evident when compared to market value of the products sold by other lessees. For instance, Mid East Integrated Steel Ltd paid at the rate of Rs 3350 per tonne and Rs 4000 per tonne for calibrated lump ore procured from M B Ispat Corporation and Shiv Shakti Steel Pvt Ltd respectively.

Besides selling the entire ROM to JSPL, Sarada Mines has also allowed the steel maker to install two crusher units having capacity of 1000 tonnes per hectare (tph) and 3000 tph within the leasehold area.

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